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Why is Nick pleased with Gatsby's honesty about Oxford?

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Nick is so pleased about Gatsby's honesty because he has not been sure himself that Gatsby is honest. Nick is aware of the air of mystery around Gatsby, and also that Gatsby has not always been completely truthful with him. Nick also recognizes that Tom is highly suspicious of Gatsby, seeing him as little more than a lowlife criminal who is not "Nordic."

Therefore, when Gatsby openly and honestly explains to Tom why he calls himself an Oxford man, Nick feels a surge of pleasure. Nick wants to believe in Gatsby. He wants to believe that whatever kind of show he might put on, pretending, for example, to big game hunt in the capital cities of Europe (which Nick knows is impossible, as the big game is elsewhere), Gatsby is at core fundamentally a decent person who will tell the truth when push comes to shove.

Gatsby might have every reason to want to best or impress Tom by inflating his background, but he doesn't. This leads Nick to have a complete "renewal of faith" in his friend.

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