[kaptain]

So is it just a terminal block to connect the three large wires? Two on the bottom (Batteries) and one on the top goes to inverter. I know the smaller is a self resetting breaker but no idea what it serves. At first I thought the large insulator block was some kind of solenoid to disconnect the inverter power. So much to take in, I may just say screw it and put lead acid batteries. 

The large block is also a circuit breaker, although the bottom terminal is connected to 2 wires, one thick and one thin wire. 
You can consider them as simple terminal blocks for connecting wires, but that's only true when everything works normally.
Once the current flow (or temperature) exceeds its rating, it will disconnect.

[quote pid="56635" dateline="1665625722"]
I still don't know how to isolate the generator's 12v output when it too is running.

I think your generator output is 120/240V only and doubt it has 12V output. Your inverter charger is always ON (unless you manually turn off the disconnect switch) regardless its on shore power or on the generator. When you have both shore power and generator power, its the work of your transfer switch that selects which power to use.