Peach's Castle is a location from the first Paper Mario game. It is the domicile of Princess Peach, and is frequently the site of many extravagant parties thrown in the Mushroom Kingdom. In the events of Paper Mario, Bowser used his castle to lift Peach's castle into the air. In the beginning of the game, Princess Peach invites Mario and Luigi to a party at the castle. However, while the Mario Bros. (and numerous other guests) were having fun, Bowser hatched an elaborate plan that caused his castle to rise into the air under Princess Peach's Castle, taking the Princess's castle with it. Many of the party guests were imprisoned and Bowser threw Mario out of a window, sending him spiraling back towards the Mushroom World. Peach was once again forced to be a prisoner in her own castle.
When close to fighting Bowser a second time, go to the room to the right of the kitchen and a toad will be running a Toad House if you open the closet.