Interesting question. As you've probably already discovered, being "on good terms with someone" means that you have a good relationship with them. However, what this also often implies is that you were once NOT on good terms with that person, which is why we often say "we're on good terms now" (like in your question). To put it another way, if you have a great relationship with a friend or colleague with whom you've never really fought about anything, you wouldn't really say you're on good terms with them, even though you are! But if you once fought with that person about something, and have since made peace, then you'd definitely say "we're on good terms now". Not surprisingly, this phrase gets used a lot to talk about ex girlfriends/boyfriends/partners, ie people you have fought with in the past.