So considering the original quote, does that mean there are hot MILFs in my area?

Well, technically, there is no Queen of England, because the correct term is Queen of the United Kingdom, as England, which is part of the UK, doesn't have a monarch itself (it used to before becoming part of the UK though).

So Hal is more pointing out a misnomer, but since he never addresses why it is so, it sounds like he's saying an obviously incorrect fact for the sake of comedy (which is the joke).