VFS doesn't take away the lower level of mounting a file system, it's a layer of abstraction that hides the details of the process. (This is a Very Good Thing, because it allows the code for managing files, directories, pipes, etc. to be written once at the top layer, a second layer to handle logical representation schemes, and a lower layer to work with the physical hardware.) There's still got to be a device, a driver, and the low-level code that knows about the actual representation of the filesystems on whatever media they occupy.
initfs appears (from the configuration dialog) to be its own ittybitty fs that reads cpio archives. From memory. Possibly in-place. I think that could live entirely in your second layer.