This is the home directory of the System Administrator, 'root'. This may be somewhat confusing ('root on root') but in former days, '/' was root's home directory (hence the name of the Administrator account). To keep things tidier, 'root' got his own home directory. Why not in '/home'? Because '/home' is often located on a different partition or even on another system and would thus be inaccessible to 'root' when - for some reason - only '/' is mounted.

The FSSTND merely states that this is the recommended location for the home directory of 'root'. It is left up to the end user to determine the home directory of 'root'. However, the FSSTND also says that:

	  
  If the home directory of the root account is not stored on the root
  partition it will be necessary to make certain it will default to 
  / if it can not be located.
  
  We recommend against using the root account for tasks that can be
  performed as an unprivileged user, and that it be used solely for 
  system administration. For this reason, we recommend that subdirectories
  for mail and other applications not appear in the root account's home
  directory, and that mail for administration roles such as root, postmaster,
  and webmaster be forwarded to an appropriate user.