I am a native English speaker and have never heard this expression before. I suggest you never say it unless you are with other people who say it first.

Great question! "Peace out" is an extremely informal way of saying goodbye. It is something that a surfer "dude" might say to someone in their close group of friends : ) This phrase does not sound polite, and I would not use it at work or other formal settings. It is slang and can be used in place of "see ya"/"cya"/ "see you". It is usually said with a hand gesture of a peace sign (two fingers in a V shape).

Peace out is nothing like piss off. Piss off is swearing and quite harsh. It's like saying get lost or get out of my face but worse. Peace out is like saying see-ya, chao, luego, catch you later. It's common among friends. Not rude at all.

I use "peace out" all the time. I don't consider it to be impolite, it's just not formal. Although in Spanish I say Hasta Nunca a lot :) That's not very polite.

Just like Ana, I have never heard the expression, However, a similar phrase in English would be 'Piss off'. It is not very polite and I would advise you not to use this.