Peasants are cannon fodder and work especially with elite units that won't flee when the peasants do.
They can be used to stop a cavalry charge, so your men at arms don't have to suffer the direct charge.
Stopping any charge. Peasants have a strong charge which is better than many units and can give these units a better advantage.
Expendable flankers, flanking is often dangerous, especially in large battles where your flankers could end up surrounded. Peasants are a worthy subtitute and their numbersm ena you can easily surround an enemy unit and break it.
Helping small elite units. Small elite units tend to be surrounded by several units drastically reducing their effectiveness. Peasants can keep them at bay allowing your elite units to focus more on killing instead of self preservation.
Chase off archers. AI archers usually flee from peasants and if they do engage they will be caught up for a while and won't be able to fire.
Preventing rebellion after you've conquerred a province, so more expensive units don't have to suffer. Spies are cheaper in the long run though.
Spearmen are much better than peasants at everything apart from there needing to be a spearmaker, which is only 4 turns up from a fort and their slightly higher upkeep.
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