Some important points about VLT peer routing.
Peer routing lets one VLT node act as a proxy gateway for its peer. In a nutshell, when peer-routing is enabled on both VLT switches you can load-balance the L3 packets through both switches, each switch forwards traffic on behalf of its peer.
Without peer-routing, packets for the peer’s gateway MAC that get hashed to the wrong switch first cross the VLTi to the peer. With peer-routing, the switch that receives them routes them directly.
Peer-routing helps to avoid sub-optimal routing, reduces the latency by avoiding another hop in traffic path, no need to have VRRP.
Keep in mind in case if switch - Peer-1 will fail with peer routing enabled, your traffic will still be forwarded without any interruption - but as you don’t have any virtual IP address any control or management plane requests won’t be answered by Switch-1’s peer.
So basically by enabling peer routing we have only one goal - redundancy and traffic sharing for L3 protocols.
During bootup of the VLT peers a forwarding loop can happen until the VLT config is applied and primary/secondary roles are elected. To avoid it, run RSTP in the core and on both peers (disabling it on one peer can break the VLT domain) and give each peer a unique bridge priority :
protocol spanning-tree rstp
no disable
bridge-priority 4096
More info about peer-routing advantages comparing to VRRP :
https://hasanmansur.com/2016/06/09/vlt-peer-routing-and-routed-vlt/