arXiv:2510.12699v1 Announce Type: cross Abstract: Different open-ended generation tasks require different degrees of output diversity. However, current LLMs are often miscalibrated. They collapse to overly homogeneous outputs for creative tasks and hallucinate diverse but incorrect responses for factual tasks. We argue that these two failure modes are unified by, and can both be addressed by, the notion of effective generation space size (GSS) -- the set of semantically distinct outputs a model considers for a prompt. We present GSSBench, a task suite of prompt pairs with ground-truth GSS relationships to assess different metrics and understand where models diverge from desired behavior. We find that hallucination detection metrics, particularly EigenScore, consistently outperform standard diversity and uncertainty quantification metrics, while using only model internals, providing interpretable insights into a model's internal task representations. We demonstrate three applications of GSS: (1) detecting prompt ambiguity and predicting clarification questions for better grounding, (2) interpreting overthinking and underthinking in reasoning models, and (3) steering models to expand their generation space to yield high-quality and diverse outputs.