You can also run it without a battery but then you're not going to be able to draw more than the generator can provide. If you have a 700 watt gen, that's all you can push. The battery lets you pull more, and how much more and for how long is determined by the watt hours of the battery pack.
Its hypothetically more fuel efficient at the cost of mechanical efficiency because you only use the fuel for the nominal power not the peak power: Around 60% efficiency from engine to the ground but it only has to put out enough to top off the battery pack so you can use a much smaller engine.
Hybrids aren't new but batteries that can handle rapid discharge and charging while also being lightweight are relatively new, the prius did come out in 2001 I believe.