Huh- even though I’m a prog-rock fan, and that is my favorite Genesis song, I never saw a lyrics sheet for “Dancing With the Moonlit Knight.” I actually thought Gabriel was saying “unicorn,” and would have had no idea what a unifaun is. A unicorn/faun hybrid? A play on words, combining “uniform” and “faun”?
The overall “meaning” of the song was always sort-of clear to me, though. It’s a reflection on England’s decline. It contrasts the glorious mythology of England’s past with the much grubbier, more commercial reality of England in the Seventies.
The unifaun, I suppose, is a made-up magical, medieval woodland English creature who’s looking at modern England and thinking, “There’s no magic here any more. What happened to my country?” I’m sure the elderly JRR Tolkien (who, I think, was still just barely alive in 1973 when the ***Selling England By the Pound *** LP came out) would have understood the sentiments perfectly.