The feature is called <a href="https://docs.joinpeertube.org/admin/following-instances#instances-redundancy" target="_blank">"server redundancy"</a> and caches your most popular videos to help serve additional viewers.
The web browser generates a random string to identify the viewer during the browser session and periodically notifies the server that a user is watching the video.
This should not be a problem with SSD disks, whereas traditional HDD should be accounted for: typical sustained read rates for a well tuned system with a 7200rpm hard disk should hover around 120 MB/s or 960 Mbit/s. The latter should be enough for a typical 1 Gbit/s network uplink.
Transcoding can also be offloaded to other machines using <a target="_blank" rel="noopener noreferrer" href="https://docs.joinpeertube.org/admin/remote-runners">remote runners</a>.
While viewers themselves contribute a little additional bandwidth while watching the video in their browsers (mostly during surges), mirroring servers have a much greater uplink and will help your instance with sustained higher concurrent streaming.