If a province contains a Forge, the owner may build one additional unit of each type normally available for building in that province each turn. If you cannot build a unit type in a province, a Forge will not allow you to build it there.

Thus, if you could normally build 1 General and 2 of each Standard unit in a province, with a Forge you could build 2 Generals and 3 of each Standard unit each turn, but the Forge would not allow you to build any Elite units there.

This is especially useful for nations which have a limited number of Generals or Elite units available.