I've found that they just work. Wire up the bottle output to the LED light and presto! Fiat lux!

The nice thing about a generator (or dynohub) is that you never worry about batteries. As long as the wiring is good the light will work. A dynohub avoids the mechanical drag of a bottle generator, but when a BG is disengaged it is just extra weight producing no drag. A dynohub is always "on" even when the light itself is off. Being on, it creates a tiny drag apparently due to turbulence currents in the windings. That drag is measurable even if tiny, and some people say you can feel it.

Not all dynohubs and BGs are created equal. For example, our tandem's Cibie seems to produce less drag than the UO8's, which is actually a Union, I think. However the Cibie's output is lower. The Union will charge the headlight's super-cap (for the stand-light feature) and light up the headlight almost immediately when I'm walking the bike; the Cibie requires 40 or 50ft.

A worthwhile link:
http://www.blayleys.com/articles/lights/index.htm