I believe it's a reference to the look of a failed LiPo battery: it puffs up and looks like a pillow, but if you puncture it fire spews forth. Reddit first cam

I believe it's a reference to the look of a failed LiPo battery: it puffs up and looks like a pillow, but if you puncture it fire spews forth. Reddit first came up with the phrase "spicy pillow" to describe that combination.