If you select "Generalization" you create an entity, that is a specialization of another existing entity. It will contain all attributes and associations of the selected entity but can be extended by additional ones.
"Insert new above selected" just adds the new attribute above the selected one instead of at the end (default behaviour).
If you have further questions about generalizations or the usage of the datamodel of the modeller, there are some learning paths about those topics and other interesting topics in the academy area.
Here is all you need : https://gettingstarted.mendixcloud.com/link/module/50/lecture/385