"Under peel" typically does not refer to selling 1 BTC physical under 1 BTC. As you said, that doesn't make sense. But what happens is sometimes when you consider all of BTC forks on the coin, the premium will be less than that. So it's really:
1 BTC + Premium < Premium + 1 BTC + 1 BCH, etc. This is because the forks on the coin are often not truly considered or desired by those collecting physical Bitcoins. In a low premium environment, this means "under peel" is a possibility.