Spartan-IIs were children, abducted at a young age and taken to Reach, where they were forcibly put through the program. IIs were heavily augmented to the point where many died and a number of others were permanently crippled. It is noted that, advanced armour aside, a Spartan-II was by far the most capable and most dangerous of all the Spartan generations. John-117 is the most well known of the second generation.
After the success stories of the Spartan-IIs started coming in, it was decided that Spartans were a good idea, but there were problems that needed to be addressed:
- There were simply too few Spartans due to the very specific genetic sequences required for selection
- The augmentation process was too harsh on the childrens' bodies, resulting in a ridiculously high mortality rate during training.
- The cost to build and train even one Spartan was far too costly, especially with funding being diverted to the Mjolnir armour program.
For these reasons, the process for creating Spartans was heavily changed once work on the third generation commenced. The selection process was expanded to accept children with more diverse genetic material, allowing hundreds to be trained at a time, and the augmentation process was relaxed so as to ensure a maximum survival rate at a much lower cost, though at the cost of diminished capabilities compared to the Spartan-IIs. Noble Six is the most well known and arguably the most capable of the Spartan-IIIs.
So the Spartan-IIIs were cheaper, less capable, and more expendable than Spartan-IIs, but they were still fundamentally super soldiers. They didn't show quite the same level of success as the IIs, with some missions resulting in the deaths of every Spartan-III that was deployed, but the missions were still seen as victories, so a 4th generation of Spartans was approved.
Spartan-IVs were drastically different to their predecessors. For starters, every Spartan had to be a consenting adult volunteer, meaning no more abducted children and no more forced augmentations. The selection and augmentation process was also changed to have no genetic requirements and a maximum survival rate. This meant that any of the volunteers would have an almost perfect chance of successfully becoming a Spartan, but despite advances in technology, this also meant that their abilities compared to a Spartan-II were greatly lacking. This was not seen as a problem, however, as it has been noted that a Spartan-IV in modern Mjolnir armour could hold their own against and even defeat a Spartan-II wearing the Mjolnir armour of their time. If all equipment is equal, the Spartan-IV would have no chance.
BONUS: There was also developed in secret an experimental set of Spartans between the third and fourth generations. These Spartans were augmented and trained so heavily that it was thought they would render Mjolnir armour obsolete. Unfortunately, only one of the participants, Ilsa Zane, survived, and it cost her sanity to do so.
Essentially, the difference between Spartan generations is the way they've been augmented and trained, with each subsequent generation being less capable and more reliant on their armour upgrades than the last.