The pitiful peasant.

[Kraxis]

Castle defense; the walls need a unit to man the towers so just throw the expendable peasants out to man the outer walls to bleed the enemy and keep your high value units in the inner defenses.

I would say that this one is about the best.

They are cheasp to get and cheap to have as upkeep. They should also kill a fair number of troops on the walls themselves. So 5-6 units of Peasants on the outer walls would deplete the enemy enough for your inner walls to take care of the remaining enemy.
Of course better troops might do better, but we generally don't like to sacrifice them, and as such sometimes were end up being too reluctant to put them in certain harms way, until it is too late.
Also the Peasants will be able to sit in castles while you shift the real troops around, defending and attacking.

[FactionHeir]

A few purposes:

Castle garrison as other mentioned already. 1 peasant unit keeps even a citadel in the green levels and is enough to make the enym waste turns sieging your castle/fortress/citadel.

Town garrison. Your towns can only upkeep certain amounts of militia for free. Additional militia has full upkeep besides a higher training cost. Especially for inland garrisons, you can replace excess militia with peasants for even less upkeep and same effect.

You can also tag em along in their own stack behind an invasion force so you can garrison towns along the way quickly and cheaply. This is because towns you capture have their pools depleted for a turn or more, which can stall your invasion army unless you want to leave a general behind or have the settlement revolt.

[Willknott]

I use them as a sort of fence for certain regions that have few land access points. An example would be the Northern border of Pamplona/Zaragosa which have a combination of only 4 access points for the two regions together. This prevents my supposedly allied neighbors from nonchalantly wandering into my territory trying to provoke a war response from me. They are unable to actually enter my territory without attacking my "fence". This usually allows me an extra turn to respond by positioning an army of my own before I suddenly find a settlement is under surprise siege by my former ally. I'm not sure, but I think it blocks access to my regions from their spies as well.

I used to use a similar tactic playing Macedonia in RTW. I would conquer the entire area around Greece from Byzantium to Crete, then build a wall of ships to prevent Rome from suddenly landing an invasion force at one of my rich cities. Their ships would occasionally attack a unit of my ship wall with one of their troop filled ships and poke a hole in my wall, but be unable to penetrate through the hole due to their limited movement being adjacent to another unit of my wall. My next turn, I would converge my wall around that ship and sink an entire army to the bottom of the sea where they belonged, then rebuild my wall and wait for their next foolish attempt.

[Rothe]

Willknot, I have also thought about doing that. I find that depleted units are even better for the job as their upkeep can really be minimal - not for the naval barricade though.

I still worry about the stacks turning into rebels. And rebels are a problem in general when you want to use a lot of weak stacks to block things.

Stil, I suppose that even in open terrain you can slow enemies down by putting some "fluff" units in the most probable access routes like places where the road comes into your area.

[Kobal2fr]

God, of course I forgot the most important thing : block spies/merchants/assassins/priests ! When you have the luxury of having natural borders (either bridges or moutains), sit peasants there, one unit is enough.

Agents cannot go through military units (don't build forts though, spies can infiltrate them and pass through. Or you can build forts and park spies of your own in them of course, but that's more expensive), and if the peasants turn brigand... well, they're peasants aren't they ?