From the dnsmasq manpage

--tftp-max=
Set the maximum number of concurrent TFTP connections allowed. This defaults to 50. When serving a large number of TFTP
connections, per-process file descriptor limits may be encountered. Dnsmasq needs one file descriptor for each concur‐
rent TFTP connection and one file descriptor per unique file (plus a few others). So serving the same file simultane‐
ously to n clients will use require about n + 10 file descriptors, serving different files simultaneously to n clients
will require about (2*n) + 10 descriptors. If --tftp-port-range is given, that can affect the number of concurrent con‐
nections.

The default tftp-max value of 50 is obvious to low for scenarios where hundreds of nodes boot at the same time.
In such scenarios congestion like situations have been observed with with the default value of tftp-max with lots of nodes that seem to be stuck in the boot processes.
An ad-hoc adjustment of tftp-max=4096 in conf/dnsmasq/coinboot.conf resolved the situation.

We need to raise the default value of tftp-max to a sensible value.

The configuration should be verified by some load testing in the CI pipeline with software like fbender which can also benchmark TFTP servers.