In a normal year many peach, apple, and other fruit trees will set more fruit then the tree can handle. Too much fruit on the tree will cause the fruit to be smaller and can also break limbs from the weight. In order to get adequate size some, if not most, of the fruit will need to be removed - a process called thinning.
The top photograph shows how fruit typically clusters on a limb. You may also notice some of the fruit has some type of damage. Start off by removing the damaged and small fruit. Next remove enough fruit so that there are about 6 inches between fruit. The picture on the bottom shows how the fruit should look after thinning.
The earlier that fruit is thinned the better the size response of the remaining fruit. You may want to wait until after some of the unpollinated fruit drop off naturally (usually in May or June). You do not have to dispose of the fruit that is on the ground since they usually decay very rapidly.