@Richman - I think like with all reversible transformations, all the information about who Fooly was before is stored somewhere. Maybe in his aura or in akashic records.
So when the transformation is dispelled, the real state of a person gets restored. Whatever memories Fooly accumulated while transformed risk being overwritten.
On the other hand, this Fooly seems to recognize Leo. Which means this Fooly is the current Fooly, with the concept of "child" forced on him by magic. Which means he has all of his adult mind somewhere in his head, it's just sealed off. When the spell wears off, Fooly would be super-embarrassed.