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I am not expert, but seems plausable. Shock comes from high voltage electric charge jumping from metal to skin. If you press it, you are part of the electric charge. If you are far away, charge cannot jump. Problem is only when you are couple of centimeters close to it. AFAIK, this is not current, but electric discharge, I think it cannot kill you (it is just very unpleasant), but maybe someone else knows better?
Thing that confuses me is that when you let go, you should have the same charge as the generator. No charge difference, no arc. Unless I'm wrong about something, which I probably am (hence my confusion).
The generator is generating a difference. Even if you have the same potential when you're holding it, as soon as you let go, that ends.
Does the human body rapidly discharge into air or something?
Enough for a change in potential to cause arcing, as we can see. I'm sure you could find relevant experimental studies, or even conduct them on yourself with a proper transformer and voltmeter.