Peasants (RTW Unit)
Peasants are reluctant warriors, at best. Going to war is just one more burden of a hard life.
Overview
Peasants are reluctant warriors, but numbers are useful in all armies. Forcing peasants to fight is one way of getting lots of men in the field quickly and cheaply. They have little tactical sense, and even less willingness to fight - they would rather be defending their own homes than be dragged to a battle they neither care about nor understand. If nothing else, they are useful when there's digging to be done! They are, however, experts at reading the land and hiding whenever there is cover.
Details
"Civilized" Peasants
Civilized peasants have the lowest stats in the game and nothing but a knife for offense. They are nigh on useless in battle, although their large unit size seems like it may be helpful their morale is so terrible that they break in almost any melee. They cannot even form a battleline. If they are charged by cavalry they are as good as dead. If they are put in any dangerous situation they will probably run away, except they will tolerate being arrow fodder for awhile if they are not also in melee. In melee they will do almost no damage, and even missile troops will beat them handily. Town Watch, the worst non peasant unit, have 3 times the attack and 7 times the defense. Peasants are often actually a liability because units breaking causes other units to lose morale and can lead to a mass route.
They are very cheap, so they are great for suicidal tasks like pushing rams or digging risky sap points. They can also be stationed outside settlements during combat so enemy defenses will shoot at them rather than other units. Peasants when put in loose formation have tons of space between them, so most arrows miss them. Peasants can also be stationed behind your lines. Simply having units nearby helps boost the morale of friendly units and hurts it of enemies, regardless of the solider.
Another great use of them is to guard settlements that are not likely to be attacked by other factions. They have the lowest upkeep of all units and combined with their large unit size they are more effective at public order management than other units. One downside of this use is that you will need a small group of actual combat troops to take care of rebels and brigands. Especially for large empires, this strategy can save you enormous amounts of money.
Another good non combat role for peasants is to recruit them in big cities and disband them in small cities, helping to grow the smaller cities. You can also fill the recruitment queue with peasants in a city that has public order issues; this reduces the population, which makes your garrison more effective since they have less people to police. It also temporarily reduces squalor and can cause a public order boost from the 'population boom' modifier.
Factions
Eastern Peasants These peasants use a pitchfork. They have much better stats and cost a little more. they can be a tolerable unit for distraction sometimes.