VPC peering, as the name implies, is connecting two or more VPCs to allow network traffic from one VPC to another using the private IP addresses that are assigned to the instances. The instance launched in a peered VPC can communicate with any other instance in other VPCs just as they would if they existed on the same network.  

A VPC can be peered with other VPCs created by some other AWS account. However, the VPCs to be peered should be co-located in the same region. VPC peering doesn't require additional hardware. AWS uses its existing resources to peer between VPCs: