Is peak performance capability off for my iPhone SE (2020) running IOS 16.2 (see screenshot)

Your battery is shot, time to get it replaced.

Batteries degrade over time with usage due to chemical aging, that's just how they work.

You can expect about a 1% drop per month with average use on an iPhone.

Apple recommends replacing it when it reaches 80%. To check your battery health, go to Settings > Battery > Battery Health.

iPhone Battery Replacement.

iPhone Battery Repair & Replacement - Apple Support

About Lithium Ion Batteries

iPhone Battery and Performance - Apple Support (IN)

You need a new battery in your iPhone. Once Battery Health dips to 80% or less the useful life of the battery has been spent.

You can schedule a battery replacement for $89 here --> iPhone Battery Repair & Replacement - Apple Support

Peak Performance is simply a statement that your iPhone is operating at "Peak Performance." It's not software that runs the performance of the phone. It just lets you know if it is or isn't operating at peak performance.