Selecting "Generate Passwords and notify the user via email." is how the Admin can make sure a temporary password is generated when creating a new User. Selecting "Temporary Password and Confirmation Email Required" is not a valid option when creating a new User. There are temporary passwords available for setup of new users in Salesforce. This is a default feature, but it requires setup by selecting the correct option.
References: https://help.salesforce.com/s/articleView?id=sf.users_add.htm&type=5