I do not accept or acknowledge "a ship is bigger than a boat" hegemony.
But if you call it a ship, then it can have a boat and you don't have to say things like "they launched the boat's boat".
Submariners refer to their vessels as boats, though. So in that sense, the Royal Navy does have several rather large boats.
I'm in London and it was not clear at all, considering how pretty much anything here is HM.
I think you might be an outlier in this case. 'HMS' is pretty widely known to mean 'ship' (in the UK, at least).
But the 'having islands' adds confusion: HM QEII is known to have islands, to the layman boats are not.
It doesn't make it clear unless you know what that means. "HM" is understood to mean Her Majesty, but the "S" could mean anything to those not familiar with the abbreviation.
In that case, take the time to check what the abbreviation is?
Headlines are inherently not exhaustive in their explanation, that's kind of the point.
What's CSIS? NFB? OHIP? These are all acronyms that are geographically localized, and arguably HMS, like NHS and OBE is one of those as well.