i had a puffback from my wood stove tonight . i was burning it pretty hot . then closed up primary air intakes and MPD . then after a bite i heard the sucking sound then the puff of smoke . the wife said what the hell was that i said wow that was a puffback . i've never heard of a puffback from a wood stove .
Your wood is too dry and too much surface area. The wood combusted into gas and unburned particals from the heat. The fire was starved for oxygen and created mini-backdraft explosion. You simply overwhelmed the combustion air intake of the stove.
Mix some larger chunk wood in with that pallet wood and slow your fire down. Burning that hot can't be too good for the stove.