yes, IPFS is designed to host the entire internet. You can selectively mount sub-graphs arbitrarily, which means only downloading locally exactly what you need.
Unfortunately that alone would not have allowed Git to be fast on such a huge repository. Normally (without tools as sparse-checkouts) Git would read all files for example on git status. Therefore IPFS would also download all files locally, making it a moot addition.
You would probably still need the changes they made to Git itself. But fundamentally IPFS is also a filesystem virtualization layer (so should be able to do everything their file system virtualization is doing - if it doesn't already), and inherently has lazy checkouts.
The main added benefit is that if your friend on the LAN has also checked out the parts you need you can get them directly from them rather than some central repo, which could make a big difference in a company of 10's of thousands of employees.
This is why I think that enhancing the protocol that GVFS uses for downloads with a IPFS backend might be an interesting solution to making everything distributed again.
