Peace was a term that was often used to describe a time in which both sides of a conflict were not fighting each other. During such a period, a peace treaty was often signed. The term was also common when describing a person's state of mind.
Many worlds throughout the Federation and even beyond, were characterized by war and bloodshed, but peace meant the opposite of that. On Earth, peace was associated with the peace symbol, which was considered a sacred thing in the American hippie culture of the 1960s. (DS9: "Past Tense, Part II")