Peer review has been used in academic publishing since the 17th century. All major funding agencies today require peer review of grant applications, and a majority of journals require peer review of submitted manuscripts. The peer review process relies on the idea that peers with similar expertise are often the best judges of the quality of work, because much of academic research is specialized.
Peer review of articles occurs after the paper is submitted to a journal. that journal's editor then send the paper to an advisory board or external reviewers with expertise in the subject of the article. The reviewers may know the name of the author, but the author does not know who the reviewers are. The reviewers return to the editor a report of any problems with the research presented in the article, comments on originality of the research, notes if the conclusion is supported by the research given, and comments on the grammar and writing style of the article. The editor then decides whether to publish the article as is or with revisions, or to reject the article.
Peer review of grant applications works a little differently. The National Institutes of Health use committees with varying expertise to review applications, with secondary review by an advisory council that includes both scientists and members of the public. The National Science Foundation reviews proposals by an NSF program officer and 3-10 outside NSF experts in the field of the proposal who make recommendations based on merit and impact.
A peer reviewer of an article or grant application has several responsibilities:
Complete reviews in a timely manner.
Accept an assignment only if you have the expertise to assess the work.
Remain objective and avoid personal or professional bias. Personal, financial, or philosophical conflicts of interest should be disclosed or lead to declining the review opportunity.
Do not share the material under review with anyone outside the review process unless approved by the editor or funding agency.
Participate in peer review processes even though there is usually no financial compensation for the work.