Does this unlimited PTO still have to adhere to any legally required minimum PTO limits? If not, what prevents them from just not giving their employees any time off ever and bypassing the peer pressure part entirely?
PTO regulations are created by the individual States. None require PTO to exist. They do regulate accrual of PTO if it exists, sometimes with unintended consequences for employees.
The origin story is that "discretionary PTO" was created to enable people to take longer vacations than was feasible within the regulatory constraints of accrual-based PTO. It can be abused in other ways but the intent of the people that invented it were employee-friendly.
Maybe in the US, but in countries with minimum holiday time you get the minimum in your contract (or a bit more) and the employee handbook says you have unlimited. Companies can’t shirk their responsibility here legally by saying they give unlimited vacation.
The origin story is that "discretionary PTO" was created to enable people to take longer vacations than was feasible within the regulatory constraints of accrual-based PTO. It can be abused in other ways but the intent of the people that invented it were employee-friendly.