This chapter gives us Augustine's definition of "peace", which is for all intents and purposes the same as Plato's definition of justice with certain critical exceptions. First, the definition:
Peace, in its final sense, is the calm that comes of order. Order is an arrangement of like and unlike things whereby each of them is disposed in its proper place.In the soul, this means "the harmonious correspondence of conduct and conviction;" in the body, "the ordered equilibrium of all its parts;" in the state "an ordered harmony of authority and obedience between citizens;" in the Christian "ordered obedience, guided by faith, under God's eternal law." And so on (Augustine gives several examples). If we are not at peace, this is because something is out of alignment within us.
When someone is unhappy, it is because this order has been violated and disorder rules. Even the wicked can't escape this definition, because "their very misery is related to responsibility and to justice." This of course means that every being has some kind of existence, however disordered and wicked their soul may be. The devil himself has still some good, because he still exists as a creature of God: "God does not hound the good which He created, but only the evil which the devil committed."
So even in hell, people are in pain because they know how much they have lost, not because they have lost absolutely everything per se. "In the midst of their agonies the evil and the godless weep for the loss of their nature's goods, knowing, meanwhile, that God whose great generosity they contemned was perfectly just when He took these goods away."
Any pain we experience as a lack of peace in our soul is attributable only to ourselves. God made men good and gave us everything we need as a gift exactly when and how we needed it-- "daylight, speech, air to breathe, water to drink," etc. And yet,
These good gifts are granted, however, with the perfectly just understanding that whoever uses the goods which are meant for the mortal peace of mortal men, as these goods should be used, will receive more abundant and better goods--nothing less than immortal peace and all that goes with it, namely, the glory and honor of enjoying God and one's neighbor in God everlastingly; but that whoever misuses his gifts on earth will both lose what he has and never receive the better gifts of heaven.Part of the peace of a Christian is recognizing the proper place and role of the created order in existence. We are not to elevate this world to the level of heaven, nor (as has already been said) try to pull heaven down to this world. Instead, we need to thank God for the good gifts of this life and use them accordingly, all the while looking for the heavenly City.
I said earlier that Augustine's definition of 'peace' is very similar to Plato's definition of 'justice,' with important exceptions. Plato argues in the Republic that justice is order in the soul and order in the state, with each part doing what it should be doing in its proper role and relation to the other parts. And if all we had of Augustine's City of God was this particular chapter, we'd have to write him off as a Christianizer of Plato along the lines of Clement of Alexandria. Yet, we know there are key differences, including (but not limited to): the place of Christ as the only truly 'just' man; the role of Scripture as the sole fount of knowledge concerning these higher truths (it was Augustine who coined the phrase sola Scriptura); and perhaps above all, the role of faith and grace as the means by which these virtues are brought to bear on the human life. Like all Greek philosophers, Plato has no category for either concept. Reason, emotion, appetite, and even a proto-will (Aristotle especially had some view of this) shape his writings. The idea that 'justice' is utterly beyond fallen man apart from Divine intervention and imputation by faith is utterly foreign to Plato and his philosophical descendants.