This is done by beating an AI on the "Easiest" difficulty. So the wording of Peaceful is just off.
I combined this achievement with a Regicide game while also deleting my initial town centre. I then spammed some petards and killed the King with those units. They kill buildings really fast too, something which the King will be hiding in.
To setup this combination match:
Note that the treaty is optional. I did that so I could make the 100 Throwing Axemen (that's why I chose the Franks)
Deleting your TC (Town Centre) then will net you at the end of the game:
And of course the achievement what this guide is for