PeerDependencies with npm > v7

Question

As explained in the npm documentation, after npm v7 migration, now PeerDependencies are installed by default. Here is the behavior from the documentation:

Trying to install another plugin with a conflicting requirement may cause an error if the tree cannot be resolved correctly.

When is a plugin considered as a conflicting requirement? What do they mean by the tree cannot be resolved correctly?

Therefore, I created different use cases to have a better understanding, tell me if I am correct.

Use case 1

Package.json of my project

{
  //...
  "dependencies": {
    "a": "1.0.0"
  }
}

Package.json of a

{
  //...
  "peerDependencies": {
    "b": "^2.0.0"
  }
}

Here is the result:

node_modules
  |--- a (v 1.0.0)
  |--- b (v 2.0.0)

Use case 2

Package.json of my project

{
  //...
  "dependencies": {
    "a": "1.0.0",
    "b": "2.5.0"
  }
}

Package.json of a

{
  //...
  "peerDependencies": {
    "b": "^2.0.0"
  }
}

Here is the result:

node_modules
  |--- a (v 1.0.0)
  |--- b (v 2.5.0)

Use case 3

Package.json of my project

{
  //...
  "dependencies": {
    "a": "1.0.0",
    "b": "3.2.0"
  }
}

Package.json of a

{
  //...
  "peerDependencies": {
    "b": "^2.0.0"
  }
}

Here is the result:

node_modules
  |--- a (v 1.0.0)
       |--- node_modules
              |--- b (v 2.0.0)
  |--- b (v 3.2.0)

Does the last use case work? In which use case, it can not resolve the tree?