It will also reduce string vibration and noise. To be accurate you need to be able to see the target. Top shooters usually have excellent vision. A peep sight reduces the amount of light that reaches the eye.
Less light means less visibility.
When you look through a peep you lose a lot of detail. The kill and heart rings of a 3-D target disappear. You have to guess where they are. A light gathering or electronic sight pin makes it worse because the brightness of the pin makes it more difficult to see past it and make out detail on the darker target or animal. It is like shining a light in your eye and trying to see what is past the light.