Crispin is so stunned to find out that he has been declared a "wolf's head" because of the meaning of this phrase. In Chapter 8, when Crispin goes to Father Quinnel, he shares with Crispin why it is precisely that men have been searching for him and have been trying to capture or do worse to him. When he tells Crispin he has been declared a wolf's head by the steward, he asks Crispin if he knows what this means. Note how he replies:
That... I'm considered not human... That anyone may... kill me. Is that why they pulled down our house?
To be a wolf's head therefore is to become something of a persona non grata. It is to be declared less than a human and to become a target for anybody to kill. In addition, those in power paid money to the people who killed a wolf's head, so there was an added incentive to kill them. Crispin is so shocked because he knows he has done nothing wrong, and in addition, he is just a young boy. A more unlikely candidate for a wolf's head could not be picked. He is so stunned because he does not understand why this has happened to him, and he is likewise terrified for his life. To be "considered not human" is a massive thing for a young boy to cope with, and so it is clear that this is a major trauma for Crispin as he is so bewildered by what has happened to him and the reasons behind it.