I don't think that this is 'live' per se, at least it's not real-time. It's a tool to help level designers design city buildings quickly, as opposed to something like Subversion's procedural city.

Either the building mesh is generated procedurally when the level is loaded or it is generated and 'baked' in to the static level mesh at compile time (it's not entirely clear from the doc which method it uses).

If Epic's building it, you can expect it. They're one of the biggest middleware providers for games.

IIRC, many games use a procedural foliage generator for trees and shrubberies.

You do recall correctly. Speed tree brings us shrubbery to plenty of games. [http://www.speedtree.com/]