When you play DW4 you'll see the first US puff puff room, but it just consists of the girl saying "puff puff" over and over again, then she tells you that you're irresistable to women.
Anyway, this is the only thing online I could find about the puff puff in Dragon Warrior, and it relates to Dragon Warrior VIII. It's also a Christian review of the game.
"Sexuality is another thing that is present in the game, although it is not overly abundant. One your party members, Jessica, is especially well endowed and throughout the game you are give the option of clothing her in various revealing outfits. Also, the skills you gain for her are sexual in nature. She may learn to 'puff-puff' the monsters (basically squeezing her breasts) to paralyze them, or dance to cause them to be paralyzed in affection for her. You can also visit a shop where a girl will give you a 'puff- puff' (a puff puff is basically putting your head in between someone's breasts) but instead she uses two slime monsters. Note that this is purely optional. There are various other girls in the game who are dressed in revealing attire, but it is all done in cartoon nature, and it is really not that serious. Angelo, another one of your party members always has women on his mind, and is constantly flirting with female characters. Regardless of this, he is very noble. Some other offensive content may include gambling and drinking, and at the end of the game, his priorities are somewhat refocused."
http://www.christiananswers.net/spotlight/games/2006/dragonquest8.html
Any other searches about "puff puff" were about smoking pot.