It's active/standby(old style), it will go from server to active to other server and reply from that server to active back to other server. Depending on the hashing on the server it could go two ways, either direct from server to active, and then to other server. Or, if the server hashing sends it to standby it will go to standby then standby will send it to active over peer link and then active will send it to server.
In newer VPC code (like even 6.x i believe) this should automatically be active/active with HSRP now, and it should use the VMAC and the VMAC will be installed on both switches, however not all devices use the VMAC properly and thus this feature:
peer-gateway feature, the standby installs the active mac address in its own table with a "G" (gateway mac) and then if the server hash sends it to standby, it will do lookup in routing table and send it to other server instead of sending to active first. So both will be used in routing path all the time, like they should be.
Even more clarification: active/active doesn't mean both hsrp groups are active, it means both switches are active forwarding ipv4/6 for the SVI. HSRP will still have an active/standby. How this works is that the switch inserts the HSRP VMAC into the mac address table, which you can see with a G next to it. This exists on both switches in the pair, where without VPC would be a duplicate mac address.
So the peer-gateway is only necessary if the devices don't put the right mac address in their table.
Peer-gateway could also break some routing protocols and that's where the layer3 peer-router tweak comes into play.
I would not use it unless necessary, as always test you configuration first.