Hi
Here is description of main function of "peer-gateway":
Beginning in Cisco NX-OS Release 5.0(3)N1(1b), you can use the peer-gateway command to allow Cisco Nexus 5500 Platform switches to perform Layer 3 forwarding if the destination MAC of the incoming packet is the MAC of its vPC peer switch. The peer-gateway command avoids forwarding such packets to the vPC peer link.
So without this command switch will send all packetd destined to "vpc peer's mac address" through peer-link. And "peer-gateway" allow to n5k route such packets.
http://www.cisco.com/en/US/docs/switches/datacenter/nexus5000/sw/operations/n5k_L3_w_vpc_5500platform.html#wp998473
This command is not required - but it improves network performance, allows traffic be balanced better etc...
HTH,
Alex