What is this?
This is a simplified version of Outertale (Project Spacetime) where all violent routes have been removed, the fight button is gone, and battles are much easier.
Why peaceful mode?
This is for those who want a version of the game they can play without worrying about the darker aspects of the base game. This version is more akin to what Outertale originally aimed to be (a pacifist-only game)
Personally, I also consider this the more canon version of the game, though you're free to decide which one you prefer as your idea of canon. Both versions have their purpose, and both can be enjoyed by anyone who so desires.
Anyway...
The full list of credits, inspirations, and the like can be found on the main game page. Otherwise, have fun and stay as long as you like <3