The first types of firewalls were packet filtering firewalls. It is the most basic firewall making access decisions based on ACL’s. It will filter traffic based on source IP and port as well as destination IP and port. It does not understand the context of the communication and inspects every single packet one by one without understanding the context of the connection.
“Second generation firewall” is incorrect. The second generation of firewall were Proxy based firewalls. Under proxy based firewall you have Application Level Proxy and also the Circuit-level proxy firewall. The application level proxy is very smart and understand the inner structure of the protocol itself. The Circui-Level Proxy is a generic proxy that allow you to proxy protocols for which you do not have an Application Level Proxy. This is better than allowing a direct connection to the net. Today a great example of this would be the SOCKS protocol.
“Third generation firewall” is incorrect. The third generation firewall is the Stateful Inspection firewall. This type of firewall makes use of a state table to maintain the context of connections being established.
“Fourth generation firewall” is incorrect. The fourth generation firewall is the dynamic packet filtering firewall.
References: CBK, p. 464 AIO3, pp. 482 -484
Neither CBK or AIO3 use the generation terminology for firewall types but you will encounter it frequently as a practicing security professional. See http://www.cisco.com/univercd/cc/td/doc/product/iaabu/centri4/user/… for a general discussion of the different generations.