What does peer assessment mean when grading group work?

It means the lecturer is being lazy. I've suffered peer assessment and it can be very pleasant or unpleasant depending on the relationships within the assessing group. You have the people who will mark everyone at 50-60% because they don't want to say it more or less than a pass. Then you have the people who think everyone is significantly worse than them, so mark everyone down. Then the last group who mark people they like highly and people they don't lowly regardless of the quality of what is being assessed. These marks are usually them averaged together and the result is a mark in 45-60% range, for most, the popular people may end up with slightly higher marks.

The other issue is what are you assessing, if it is a presentation and marks are given immediately after the person has presented, first presenters will get the benefit of the doubt marking and it may be higher than those who present later, once the expectation level has been established.

If everyone gets on in a group, the results are likely to be skewed upwards, if there is disharmony they may be skewed downwards. If the peer marking has equal weighting with the lecturers mark then it will have an impact on the overall mark. If it has a lower weighting, it has less impact on the overall mark.

My advice is be nice to everyone, create a positive impression, it is harder to give someone a low mark if you like them.