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gbj_tester
I've never heard of anyone in the German-speaking world using "Magister" as how they want to be addressed. It's extremely old-fashioned in that way. There used to be quite a few job titles that used it when Latin was still used to make such titles, but it's not a form of address in German that I've ever heard. Maybe it's an Austrian thing, or there's something I've missed completely, or he's miffed that he didn't manage to do a PhD? I'd say that if your German colleagues ignore it, you can safely ignore it, too.
Of course it does, it's equivalent to 'master' for academic degrees. In fact, in the course of educational reform, quite a few German degrees have been re-christened 'master' from the older "Magister".
Edit: Or is it just something in his e-mail signature? Then it's not meant as a title, just to tell people about his education.