The letters page ‘In The Chapters’ by Ann Parks, page 21, gives some context - it appears that a previous issue had asked a question to which Mx was one of the suggested answers:
But the actual first use in print is on Page 16 in an article called ‘Single-Again Scrapbook’ by Pat Kite. This appears to be a short story, possibly part of a serial, involving a flirtatious encounter at a party:
“THE WORST PROBLEM facing the single woman today is having to decide whether she is Miss., Mrs., or Ms.,” said the Blue-Eyed Man as he sat sipping his rosé.
“Ooohh, really?” I gasped, swallowing my frito whole.
“I’m glad you agree,” nodded the Man, taking the matches from my hand to light my cigarette. “Now, where I work we make it a point to call every female ‘Ms.’ It took me quite a while, but I made it. Now everybody’s happy.”
“Where do you work?” I asked.
“The welfare bureau.”
“Do you mean if you get a widow who was married forty-eight years in your office, and you address her as Ms., she likesit?”
“Why not?” said the Man.
“Frankly the term Mizzzz reminds me of the servant section of a pre Civil War Southern plantation,” I commented, drawing out the words through clenched teeth.
“Oh, that was in the past” smiled the happy Man. “Now Ms. for everyone connotes individuality. What tile do you go by?”
“Mrs.” I replied with a shrug.
“Why Mrs.?”
“Because I have four children and I like them to look legitimate, that’s why. Anyhow, if Mrs. and Miss are to be shortened to Ms., then I think Mister and Master should be changed to Muster … abbreviated Mu. On second thought, maybe both sexes should be called Mx. That would solve the gender problem entirely.”
“Are you a women’s libber or something?” said the horrified Man. "Then how come you didn’t get mad when I lit your cigarette?“
“Because it was a gesture of courtesy,” I answered, “and I don’t think good manners ever go out of style. Besides, I love having doors opened for me, and my heavy packages carried.”
“Oh, then you’re not a libber!” said the Man with a sigh of relief.
“It all depends on how you look at it,” I replied. "For instance, if you’ll give me my matches back, I’ll be able to light your cigarettes. We could take turns.“
"You wouldn’t. . . .!”
“Why not?” I said with a tiny smirk.
“You know, the biggest problem women have today is whether to be Miss, Mrs., or Ms.,” said the Man, as he took the matches from his pocket and lit my Bel-air.
“Not quite, kind Sir,” I commented, trying to change the topic to the artistic merits of Alice Cooper.
"Yes really, Ma'am,“ laughed the Man as he got up to dance.
And we mixed our whimsey with our wine until well past midnight.”