I'm not much good at knitting -> correct because it's a negative use of "much".
I'm very much aware of the problem. -> correct because "much" is part of "very much".
There are some cases where it seems grammatical. For example, "he was much annoyed" is fine. But that's probably because "annoyed" is both an adjective and a past participle of a verb, and "much" is grammatical before past participles (e.g. Manet's much admired paintings).
And "much" is grammatical before adjectives for comparisons. For example: "My car is much bigger than yours."
There's no profound reason underlying why we use the word "much" like this. It's just how its usage has evolved, and how we most commonly use it now.