On the more precise history of the first-generation limit, the intent was to ensure that citizenship couldn't be transmitted to endless generations of Canadians living abroad. In terms of what was behind it, under the previous legislation, before it was changed, there was a connection test for those born abroad in the second generation and beyond. If you were in that situation, before your 28th birthday you were required to apply to retain your Canadian citizenship. The connection test was to demonstrate that you had lived for at least a year in Canada.
The people affected found those requirements problematic. They said they weren't aware of them or didn't understand them. They didn't file their applications on time. In some cases people were losing their citizenship by operation of law because they weren't filing applications in time and meeting the requirements.
That created problems for those people and for the department. The stakeholders asked the government to replace the connection test and those retention requirements with something that was simpler, clearer, and easier for people who were affected to understand. So the forward-looking connection test was replaced, when the law changed in 2009, by the first-generation limit.