Peat is one of the many types of soil that can be found in soil layers. Peat layers occasionally contain an aquifer.
In real life
Peat can be used as a home-heating fuel (after drying), and some places have power stations either directly fueled by peat, or by distilled alcohol made from peat. On geological timescales, buried peat eventually turns into lignite. It's also used to give Scotch whisky its distinctive taste. None of these uses are implemented in Dwarf Fortress.
SCS = 90/5/5