Basically what it means is that there are only two (2) files needed to boot Fatdog, which is vmlinuz and initrd instead of the usual three (3) (or more): vmlinuz, initrd and base.sfs (puppy.sfs, zdrv.sfs, adrive.sfs etc). The base.sfs file still exists in Fatdog but it is contained within the initrd, thus you can't see it. It also causes initrd's to swell: initrd's size is usually around 3-5 MB but in Fatdog it is about 200 MB because it contains the base.sfs - hence the name "humongous".
Why use humongous inird over Puppy's traditional 3-file setup?
Of course, like anything else, the "faster boot" part depends on your BIOS and your hardware. It is generally faster to use humongous initrd on harddisk frugal install but it isn't always so. Humongous initrd may be slower to boot on other kind of setup / install devices, too (though again, not always). You may have other reasons for preferring the standard 3-file setup:
Fatdog supports converting the humongous initrd back to a small initrd, extracting the base.sfs in the process and reverting to the standard 3-file setup:
Parting words: Will using a small initrd improve boot speed? Perhaps. There is not definite answer. You just need to go a try.
Note: base.sfs is a generic term for Fatdog's system SFS. The actual filename varies with Fatdog versions, it is usually called fd64_xxx.sfs where xxx refers to the version number, e.g. fd64_620.sfs.