Having used a few cheat codes to instantly see what every voxel is composed of... the generation isn't great. It's just spheres of certain materials, as well as x-shaped veins. It feels natural when you're randomly chipping it out, but when the curtain gets pulled back, it's not as impressive.

Does DF actually generate the geology of the whole planet, rather than just the playable area?

You select the area you'll be playing with at the embark, so yes, the whole planet's surface is generated. But I apart from the surface layer, I doubt that this simulation takes planet core into account, for example: in the game world's it would be filled with SPOILER anyway.

plate tectonics is a planned feature for worldgen in the future

The entire planet!

This is the "Simpsons Did It" of video games.