An integrated circuit is a cicuit where all the components are wired in to the same board, and linked by the minimum of wiring, normally on the reverse of the board.
A microchip is a similar device where the components are fabricated on the surface of a very pure silicon chip, and similarly linked by conductive material. The microchip is much, much smaller than the integrated circuit but is similar in concept.
The term "third generation" is a very loose one, referring to major steps in the evolution of a design. As the integrated circuit came first it would be a previous generation to the microchip