Your ordinary fodder for the dragon, the peasant is the loyal subject of the King in the realm of STWALT. A peasant is usually encountered randomly across the realm.
Once you encounter him, you can either escort him back to a farm (small or large farm) or rob him. But, as a kind character you are, surely you would escort him safely. Robbing him does not produce much results anyway.
A safely escorted peasant to the farm will give you 1xp as a token of your kindness to the peasant. Beware though, the peasant will flee if you are injured in the fight.
Trivia: The peasant you've escorted is the same peasant in the "Black Death purged " event. Maybe all the peasants in STWALT has the same generic model.