You are correct in your understanding of Bulfinch.
"I guess Gawain must be under spell that makes him older" I wonder how you came by that assumption- is there some previous context to indicate this? The passage you cite doesn't say that.
What this passage means is that Gawain is not only polite ("high reverence and observance") and physically attractive ("well in... countenance"), he also has what we call a 'silver tongue', meaning that he can use words very well to influence people and solve problems. "Ne coude him not amenden with a word" = 'There is nothing he cannot fix by talking'.