Pixel peeping is examining a digital image down a very fine detail, possibly at the individual pixel or dot on a screen level Because people spending thousands of pounds on lenses want the best possible picture in terms of image quality (IQ) or sharpeness.
That's part of it, but it also helps to be able to check that the equipment is set up to its best potential and also to look for flaws in technique, in order to identify opportunities to improve.
If all you will ever do is to produce little webshots then perhaps pixel peeping is overkill, but if you are submitting images to a stock library, or wish to print or display on a large scale, or simply take pride in achieving the best result you can then pixel peeping is a legitimate activity. You've paid for all those pixels. You may as well make sure they are doing something useful.
If you are shooting wildlife, for example, and are focal length limited, then you may find yourself needing to crop quite a bit in order to achieve an acceptable composition. The harder you crop the more important it is that your images are pixel perfect. If you have a series of similar shots then examining at the pixel level may help you choose the winner out of the set. Some people actually do use images at 100% as their final product, after cropping. The better you and your gear are then the more success you are likely to have. Pixel peeping can be a learning exercise.
You may also find, with a camera such as the 5D2, which has lots of megapixels each of very high quality, that it is possible to create two or more images from one shot, simply by cropping in different ways. An image that is shot perfectly and looks good at the pixel level will give you that option. A sloppy shot that will just about pass muster on a web forum will not.
Here's an example of a street candid taken with my 5D2 and 50mm lens. I wasn't close enough to make for an interesting shot, so I cropped in software. Maybe you like the end result, maybe not, but with a fairly solid image to begin with at least I had the option.
Original without edits....
Cropped and tweaked....