The cutout disconnects the gen field winding from the battery when the voltage is too low to charge, mainly with the engine off. This prevents the gen from drawing current from the battery and running it down.
A voltage regulator normally has a cutout relay, a voltage regulator, and a current regulator in it, thus it has 3 "relays" if you pull the cover. The cutout does the same thing, the current regulator passes the entire output of the gen to the battery, if the current is too high, it opens its contacts and disconnects the battery. Of course at that point the current goes to zero so the contacts close again, resulting in buzzing of the contacts and limiting the current output to protect the gen. The voltage regulator senses the output voltage and buzzes when the voltage gets to high limiting the field current and thus the output voltage.
Dan
