I keep reading and seeing a lot of users say that this generation is front loaded. Usually, this "observation" preempts a statement suggesting that the consoles would not do as well as their previous counterparts or sales will crash eventually.

My questions are; what are the grounds for this notion? What does it mean for "new" hardware to be front loaded? What are your thoughts on this?

My thoughts are that we can't just say, "hey, these new consoles are doing better than their previous version" (because that has never happened before with a new generation). It has to be that for them to be doing so well it must mean they are front loaded.

I would have thought, that the only way to even realistically conclude that something is front loaded is if and only if when comparing its first full year of sales to its second year, then third year we can record a decline. If the PS4 sells less in its second full year than it did in its first then yes, we can say its front loaded. I can not understand why anything can be branded as being front loaded simply cause its selling well or better than predicted. And this applies to both the PS4 and XB1. Yes, compared to the PS4 its not doing too well, but as an Xbox its currently doing better than any Xbox before it. 

360 & PS3 released in 2005/2006 but didn't peak until 2011, 5-6 years after launch. This was due to 360 getting a large mid-gen boost from Kinect and PS3 took a long time to get into mass market pricing.

Basically it just means, PS4/XB1 aren't likely to have such a late peak, most likely in 2015 or 2016, which is very common for consoles to peak in the 2nd/3rd full year.

PS4/XB1 are both sub-$400 and likely to hit $299 this year or next so price isn't a huge issue for them and unless Virtual Reality headsets really take off sometime in the middle of this gen than its not likely we will see such late peaks for these consoles.

Earlier peak.

Tech stuff is now considered to have a 2 years lifetime, so i guess it makes sense to think this generation could peak earlier than usual.

It also makes sense to think no one wants to buy a console every 2 years and that it doesn't apply to everything.

Basically early peak and a shorter generation overall.

lower initial price point -> moving of the top of the sales-curve (y axis) to the left on the x-axis (time).
that's pretty undeniable.
denying that basically means you deny that pricecuts have a positive effect on sales.

so how does this suggested earlier peak somehow correlate to a lower overall peak sales?

Unless I'm missing something, but the Wii last gen peaked early, and the PS3 and 360 peaked later mostly in part to how long they maintained a $400+ price tag and because their adoption was basically synonymous with HDTV adoption. Now these consoles have come in at a cheaper price point, so fine; they will hit mainstream pricing sooner and peak earlier, but doesn't that also just mean that the will sell better faster?

I mean if it takes the PS4 4/5yrs (just an example) to hit 100M, and then in its 6th year sales tank and it only manages 10M in sales, is that a bad thing? I mean I know we like talking sales here and all but aren't we forgetting that what really matters with consoles is how large of an install base they have, how fast they get there and what their attach rates are?

Call me crazy, but I can bet on my life that if sony could choose OPTION A selling 100M consoles in one year, then nothing for the next 5 years as opposed to OPTION BY selling 15, 18, 22, 21, 18M consoles over a five year period, they would jump on OPTION A in a heartbeat.

It's mostly just Nintendo fanboys trying to make themselves feel better.

I am not denying that or anything. Just asking, how what you have just said can somehow be made to look like a bad thing or somehow means that in the long run these consoles will perform poorly. 

They are front loaded. You insert the discs through a front loaded slot.