Tbh I never understood his ending. Regardless of his form he keeps his powers so not sure why he straight up gave up on being a mage.
His ending only mentions how he ends up and what led to it, but doesn't mention what really is wrong with him, other than his form being changed. We can still theorize a lot. There can be good reasons why he had to work in a tavern like that, but that doesn't mean he has really given up on his quest for power, and his situation may very well be temporary. I can imagine maybe Elminster sealed his power in some manner and Edwin's tavern work could be a punishment, to teach him some humility. They might have agreed that that would be Edwin's punishment if he lost their supposed duel, and it's possible Edwin had asked for some very powerful item, or "2000 years and a pointy hat" if he won.