Giant Pirate is Yally's imaginary enemy and entity (mentioned by Yally's story about what he did over the summer) who he fights. This is from Little Monster at School.
In Yally's summer story about the Giant Pirate, Yally unsheathes a weapon (a sword). A pirate --known as the Giant Pirate-- appears above a cliff (showing his head and hands). Yally draws out his sword in front of him, then hits the pirate on the finger with it and his finger bleeds. When the entity --glaring at Yally in pain-- moves in closer, Yally --before the pirate (entity) can strike back-- he stabs him (the pirate) on the nose (with the same weapon). This leads to the pirate's nose swollen and bleeding. When the fight is over, he then tears up in pain --and defeat-- and falls into the pit (and crying). He cries out loud (crying, "MOMMY!") as the fight ends. Yally (in his flashback over the summer) celebrates after the Giant Pirate is defeated.