Faith suddenly saw a very large demon. Being a vampire slayer, she's seen demons of all types that were from her Earth and other dimensions, so this didn't surprise her.
She eyed him to make sure he didn't start a ruckus or kill a human. She also didn't know the rules here fully so she didn't react. Hell, she wasn't even sure he was evil. Faith had met a few demons who were good(ie. Angel, Spike, Lorne, Illyria...etc.) and he might be one of them.
But then she went from defcon 4 to defcon 5 when he seemed to know Buffy and Buffy didn't freak out.