It's a combination idle speed, air mixture screw!
To set the idle on your Peugeot, make sure that your throttle cable is loose enough to allow the carb to spring all the way back (you don't set the idle by tightening the cable as is the case with some mopeds).
1. Warm up the engine. Ride it around the block a couple of times.
2. Tighten the spring-loaded screw all the way in.
3. With the bike on the stand, slowly unscrew the idle screw. The speed of the engine will decrease. Stop the back wheel with the brake (and then let go of the brake). The idle is correct when the wheel no longer starts turning.
I have two Peugeots, and I find that they can be picky with their idles. It seems they'll happily idle for hours on the stand, but when you're in traffic you find out that the idle is too slow and it dies on you. If the best you can do to keep a reliable idle still has the wheel "nudging" ahead, it's probably good enough.