expand-generation-1 controls the subsequent behavior of the garbage collector when insufficient space is freed by a mark-and-sweep. When this occurs, either generation 1 is expanded, or the objects in it are promoted.
expand-generation-1 is implemented only in 32-bit LispWorks. It is not relevant to the Memory Management API in 64-bit implementations, where you can use set-default-segment-size.
LispWorks User Guide and Reference Manual - 13 Feb 2015