It will all go out the window when the jurisdiction adopts the 2017 NEC and you will need to supervise the generator control wiring 700.10(D)(3)
Here is some info
https://www.ascopower.com/globalass...integrity-of-engine-start-signal-circuits.pdf
Notwithstanding the relevant responses. . . the specificity of the answers seem to not address OP's specific question which in part: “
is that a momentary contact closure. . . ?”
The answer is: it depends.
The operative word here is: generator.
To start an emergency source, the main focus would be the prime mover AKA the engine.
The ATS is not meaningful if the prime mover is not working.
Not all engines are the same. Most of the answers to OP's question point to gas driven engine similar to what we are familiar with. . .you fill it up regularly at a gas station (normally). They can be started with a battery or crank.
Although crank type starting is quite rare now.
Most modern emergency generators are diesel. They are totally different beasts.
Not only that they don't need electricity for engines to operate since there is no need for spark plugs, they are also “tricky” to start and maintain.
They need batteries to start and glow plugs (heater) to improve oil viscosity for easy cranking.
Now, to address whether the starting switch (starter) is held close or momentary.
Just like a regular car, there are contacts that are held close and some are momentary. It's the same for both diesel and gas.
Both engines have alternator to charge batteries for starting. When you turn the ignition key, the first indentation provides power to the excitation winding of the alternator. The second momentary indentation provides power to starter motor through a high-current rated contactor (relay). When you let go of the switch it returns to its open position (you don't want the starter motor to keep turning) when the engine is running. Suffice to say this is a momentary contact.
With these gas engines, the battery and alternator provide power for the high voltage coil for the spark plugs. So one contact is always closed.
On diesel engines, the first key indentation turns on a fuel valve and pump and the second indentation turns on the glow plug and the starter motor.
In both type engines the starter motor is disconnected once the engine is running.
The normally closed contact to enable the generator control system has been around for some time and hasn't been mentioned in some regulatory agencies. This is a part of engineering principles that has been employed in practical application long before these agencies even thought of making this mandatory. ( based on your post. )
Another tricky part is shutting down a diesel engine.
Unlike a gas engine where pulling out the ignition key ensures a totally disabled machine, diesel will keep turning even with the key off because fuel could still be dribbling to the injectors that would keep it turning. Hence the word “dieseling”.
Besides, diesels are engineered not to shut the fuel valve off right away because fuel lines could suck air that could make it difficult to start the next time around.
I owned a diesel Mercedes Benz car for twelve years when the fuel shortage made it difficult to find a gas station open at certain times. Truck stops are always open with a lot of diesel fuel.
Some guys running diesel service trucks probably know this.
All the best.