merit and demerit of peer group

why is the peer group so prevalent in society

No it's considered a peer group. Different aged people a ethnic group would fall into peer groups

A peer group is a social group of people with similar age, background, and social status, which functions by allowing information sharing in the group.

Cliques are small, exclusive groups within a larger peer group that may form based on shared interests or characteristics. A peer group, on the other hand, refers to a broader group of individuals who are similar in age or social status and interact with each other on a regular basis. Peer groups are more inclusive and diverse than cliques.