Active sheet (currently selected) in spreadsheet and the source sheet selected in the add-on do not match. Solution:
if you want to process the active sheet in spreadsheet you must switch to that sheet in add-on first; go to sheet configuration and click Switch
if you want to process the source sheet, switch to the same sheet in spreadsheet and hit the GENERATE button; once GENERATE button turns into CANCEL button you can switch to any other sheet and you can keep working there
What a video which explains how to switch between sheets. The video is for AnyMerge Docs add-on but the same rules apply for all AnyMerge add-ons.