Welsh (and the four, main spoken dialects) is written almost phonetically and thus pronunciation is a fairly simple matter. I shall not go into the unphonetic aspects!
In the Welsh alphabet:-
F is pronounced like v, as in vine or f as in of.
Ff is pronounced like f in if.
Quite why the railway chose the incorrect spelling is a mystery. I would have expected, that at the time, there would have been sufficient numbers of educated people in the area who would have spotted and commented on this aberration. Perhaps it was too late by the time it was spotted!
It is interesting to note that Lindsey.1974. when refering to the railway uses F, and the place Ff, whereas Jones.1982. uses Ff in both cases.
When I see the single F, I automatically think Vestiniog, which may be a correct mutation in some circumstances, especially in conversation, but here is wrong.