So you're running all the containers on the initrd kernel?
Based on the above tidbit, each Pod contains a few containers, thus a Pod (and hence all of the containers in the Pod) will indeed be running on the initrd kernel from the HyperVM instance.
The key point is that this applies for each HyperVM (i.e. one HyperVM launched per Pod). It seems the idea is that wherever you'd normally launch a container, you can now instead launch a lighweight VM that behaves like a container (i.e. fast to launch & small footprint) with default virtualization benefits.
Basically, if you replace all instances of the term "HyperVM" with "ContainerVM", it may help to parse their explanations more easily.
[1] https://github.com/GoogleCloudPlatform/kubernetes/blob/maste...