The function of an AVR, is to maintain a fixed output voltage in a generator. At the start, there is only a very weak remanent magnetic field in the rotor, left after the last generator operation, this field induces a very low AC voltage in the stator, which is sent to the AVR (functioning as a voltage controlled switch).AVR compares a fraction of the main output voltage with a reference fixed voltage, (set by a zener diode and an adjusting potentiometer in the AVR), if the ref voltage is higher than the gen output sample,the AVR permits to pass all the current generated to the rotor windings, increasing the magnetic field and so, the induced voltage in the stator windings. This is sent again to the AVR. As the RPM increases and the rotor magnitic field does the same, the output voltage is higher and higher up to reach the nominal voltage level.
Once reached this value (110VAC or 220VAC) independent of the RPMs (so the frequency, Hz),The AVR cuts the rotor feed current, causing a decrease in the voltage generated, which is detected in the AVR, creating a difference between the reference (higher) and the sample. Avr starts conducting again, but, if it fails to cut due to a shorted transistor or something similar, the excitation current increases up to reach a saturation point ,and in this point the output voltage remains topped. This condition is really dangerous for thr generator head, because the rotor windings are overloaded with the full voltage available applied to the rotor windings overheating them, and if this condition is maintained enough time, they will be burnt.This is for a brushed generator, for a brushless the excitation field will suffer and possibly the rotor winddings too.
All this control process is done in the generator head. The engine doesn't "know" what is happening in the other side. The engine control is the governor, which maintains the RPM's fixed , to permit to the gen head maintain a fixed frquency (talking about a non inverter generator) , independent of the impossed load from the gen head.The only communication between engine and generator head is the common shaft which transmits the resistance torque from the generator to the engine.
In few words your AVR is failing.