Back in the goode olde days, novels usually got stuck with one of two types of titles. They'd either be named after a place, like Bleak House, or after a person, like David Copperfield. Pretty standard (especially for Dickens!). And it makes sense, right? Either make the title a reference to the place where all the action happens—also known as the setting—or call your book after its main character.
In Matilda, the choice between the two is simple. Do we even know the name of the town where Matilda lives? A lot of action happens at the Crunchem Hall Primary school, but Crunchem Hall Primary wouldn't be a very good title. That would sound ordinary, and the book isn't really about the school.
No, it's all about Matilda, who's "extra-ordinary" (1.7). So that's the real answer to the big question in this section. The book is about Matilda—her life, her adventures, her brain. So her name is the best choice for the title. The moment you read it, you'll want to get to know her.