"To peel the garlic" means to remove the outer layer (skin) of the garlic clove so that you can use the garlic inside for cooking or eating. Full definition
Add peeled garlic cloves to the onion mixture in the pot. (wellnessmama.com)
From the produce section: I always have onions on hand and a bag of peeled garlic in my refrigerator. (forkbelly.com)
If you don't have fresh summer garlic, you can used the whole peeled garlic for the store; I wont tell anyone and it'll still be delicious! (cricketsconfections.com)