Usually used as an unkind insult to a male. Can also be used for a small dick the size of a Centimeter smaller or not much larger.
Person 1- Haha last x-mas party I got to see Person 3's Centimeter-Peter!
Person 2-Really..........that was kinda a harsh insulti'm not much bigger.
Person 1-Oh.......
The word centimeter peter comes from Scotland where a young boy name Peter was jacking off. He realized that his penis was really small so he came up with a nick name for his penis. He wanted it to rhyme with his first name. Hence the name Centimeter Peter.