The history of that nickname is explained very well on the website of the brewer of Brugse Zot, a Bruges beer.
Here you find an excerpt and the link.
https://www.brugsezot.be/en/the-story
below is from the link above just passing through but in scope of my mad magazine
The legend of Maximilian
Brugse Zot, a legendary nickname that we owe to an age-old story. Let's travel back in time. In the 15th century, the people of Bruges had trouble accepting the strict regime of their new ruler, Emperor Maximilian of Austria. There was discontent and the people revolted. When Maximilian came to Bruges in 1488 to suppress the rebellion, the people of Bruges took the emperor as a prisoner.
When they release him, the emperor takes revenge by banning all festivals and fairs. The citizens refused to let this happen and organised a big party in honour of their sovereign, in order to appease him. They asked the emperor to permit annual fairs again and to build a new ‘zothuis’ (madhouse) in the city. Legend has it that Maximilian replied with the legendary words: "Close all the gates of Bruges and you have a madhouse!”. The nickname for the people of Bruges was born.
With this authentic beer, we remind the people of Bruges of their rich history in a humorous way. Let's cheers to that!