Override the default password length when creating or updating a user profile

“Pluggable” means that you actually replace the complete function with your own of the same name, e.g. you call it wp_generate_password and have it do the same thing as the original function, with whatever modifications you want.

I don’t see a filter for modifying the args in the way you are describing, but you can modify the output if you want, using random_password.

It might help to see the source code here to get a deeper understanding of what is going on. Hope that helps!