Direct code generation involves generating object code directly from the parse tree produced during syntactic and semantic analysis. It can be performed via a single pass, where semantic actions during parsing generate the code, or via multiple passes where the parse tree is generated and then passed to a separate code generation phase. When generating code, variables may need to be moved to registers for efficient operation execution before being moved back to memory. The CAC function helps ensure the appropriate values are in registers by generating move instructions as needed. When generating code for mathematical expressions, the location of operands is tracked to minimize unnecessary register moves.