After reading the answers here and about two days of research, on the same problem, it turns out that this issue is related specifically to the fact that the webpack-development-server does not write files to your local file system and instead writes its files to MEMORY ONLY.
You SHOULD be able to properly generate files wth Html-Webpack-Plugin when you run the default webpack build command (NOT the WDS / Webpack-Development-Server) with:
webpack
Keep in mind you must be in the project directory. Alternately for those using vue.js Webpack-simple project (https://github.com/vuejs-templates/webpack-simple/tree/master/template) you can use the npm scripts that come with the Vue.js sample (located inside of your package.json) via:
npm run build
If all goes well you will notice that the files ARE written to the directory as you would have thought they should be, but were not, when using Webpack-Development-Server (again this does not work because WDS writes to memory and not the local file system).
You can see this StackOverflow question also runs into the issue when using the base Vue.js Webpack project:
html-webpack-plugin not inject js file into index.html when using webpack-dev-server
I stumbled onto this answer when reading the above question since the user mentions:
"If I run webpack or npm run build, the js file is injected successfully. Can html-webpack-plugin also inject js file into index.html when I'm in localhost?"