When they do things like show up prepared for lessons or actively participate in master class, their balance goes up.
When they do things like miss lessons or show up late/unprepared for ensemble rehearsals, their balance goes down.
Suppose someone calls me looking for a recommendation. Something like, "I need a trombonist to play this gig..."
To whom do I give that work? Well, I certainly want one of my better players to do it. But suppose that better player also has a low balance in their 'good will' bank account? Can I trust them to show up on time, be well-prepared, be professional in their behavior?
What about when students come to me asking for letters of recommendation?
Unlike a real bank account, I don't keep a specific written record. However, I (and I suspect most applied teachers) have a pretty sense of whose balance is up and whose balance is down.