Peat moss is exceptional in its ability to absorb water. A peat moss bog is 90 percent water. When peat moss is harvested and dried, it can reabsorb and store 20 times its weight in water. Adding peat moss to soil increases the soil's ability to retain moisture, which means plant roots stay moist for much longer than they otherwise would, cutting down on watering.
Peat moss, composed primarily of sphagnum moss, does not itself add many nutrients to the soil. It does, however, absorb and retain nutrients that are in soil -- either naturally or derived from compost or fertilizers -- making them available to plants. Soils that do not have the capacity to store nutrients need much more chemical fertilizer to keep plants healthy.
Peat moss is lighter, softer and more crumbly than most soils. Mixing peat moss into soil changes the texture of the soil, making it less compact and increasing the number of spaces in the soil structure. Looser, lighter soil is better able to retain water and to allow air to circulate in the soil, resulting in more oxygen reaching the roots of plants. These qualities are particularly important if you have clay soil prone to packing down into a hard mass that is difficult for water, air and roots to penetrate.
For new planting beds, mix 2 inches of peat moss into the top 6 inches of soil before planting. For existing planting beds, carefully dig down 6 to 8 inches, being careful not to disturb the roots of already established plants. Add 1 to 2 inches of peat moss and mix it in with the soil. When planting new specimens, dig a hole two times as wide as the root ball of the plant. Fill in around the root ball with a mixture of equal parts peat moss, garden soil and compost.