I've been looking for a 'And that's when they started calling me 'The Good Magician', with no luck, but there's this from 'Question Quest"; one of his wives, 'Rose' had to wait for him... And he was named by title:
"Of a sort, dear. You will be excellently cared for, for you derive from the blood of the last legitimate King, as I do not. But you will be alone, until a good Magician comes to claim you and make you his queen of Xanth. That may be some time, unfortunately."
"Time? How long?" Rose was continuing to brighten, faintly. Good care? A good Magician to marry? That should be worth waiting for.
Earlier, he had another title, and the two tend to overlap:
Folk were calling me the Magician of Information, and both MareAnn and King Ebnez prevailed on me to hurt no feelings by disabusing them of this status.
Not the most conclusive, but, then, it's would be a simply way to give him the title, retroactively, since it's been in use since the first book. (Someone calling someone by a name or title, and it in effect BECOMING their name and/or title isn't exactly unusual for Piers Anthony, or a lot of authors, for that matter.)
EDIT -- Bah! Now I'm in for a long spate of reading; thinking back, I want to say he started being called that in response to another magician (like Trent, at the time) being called 'The Evil Magician. Oh, this is going to be a lot of reading...