NFAMS is a constructed variable that indicates the number of families within each household. A "family" is any group of persons related by blood, adoption, or marriage. An unrelated individual within the household is considered a separate family. Thus, a household consisting of a widow and her servant contains two families; a household consisting of a large, multiple-generation extended family with no lodgers or servants would count as a single family.
NFAMS is constructed from information in RELATE (relationship to head) and from the constructed pointer variables SPLOC, MOMLOC, and POPLOC (location of spouse, mother, and father). See those variable descriptions for more detail.