Peg layer are useful when you are doing more advanced puppet rigging. Peg layers are trajectory layers that do not contain drawings. They are motion paths that you can use to control your entire puppet or advanced hierarchies.
Parenting a drawing layer to a peg layer allows you to divide your motions on two separate levels. You can scale a body part up the chain of pegs directly on the drawing layer. This way, you do not affect any child layers that could be attached to that part.
Then, you can perform your translation and rotation on the peg layer so all the parts attached to that peg layer follow the same trajectory.