'peat-smelling' originates from Modern English, formed by compounding the noun 'peat' and the present participle 'smelling' of the verb 'smell'.

'peat' appeared in Middle English as 'pete' (from which modern 'peat' derives), while 'smell' comes from Old English (for example 'smellan'); the compound 'peat-smelling' is a modern productive formation combining those elements.

Initially it simply described something that smelled of peat; usage has remained descriptive and literal, referring to the odor of peat or peat smoke.