Final answer:
Luna Lovegood is often called 'Loony' Luna by her peers at Hogwarts due to her eccentric personality.
Step-by-step explanation:
The nickname often used to refer to Luna in the Hogwarts setting is 'Loony' Luna Lovegood. This nickname was given to her by other students due to her quirky and unconventional behavior. Despite the nickname initially having a negative connotation, Luna embraces her unique personality and becomes a beloved character in the series for her authenticity and kind-hearted nature.