Transit: a carrier sells you access to the entire Internet — it carries your traffic to any destination. Peering: two networks exchange only their own traffic (and their customers’), directly or through an Internet exchange point (IXP: France-IX, AMS-IX, DE-CIX…), most often settlement-free.
Peering cuts your transit bill and the latency toward big senders (CDNs, streaming, clouds) — but it is never sufficient alone: it only covers the networks you exchange with. The classic strategy for a network with its own AS: transit for universality, peering to offload heavy flows. Peering prerequisites: an AS number, a port on the IXP, and traffic to exchange.