The 12-year-old was enjoying end-of-year celebrations on December 16 when a freak gust of wind picked up the castle and several inflatable zorb balls.
Peter, one of six who died in the incident, was farewelled at a moving funeral service in Devonport on Wednesday afternoon.
Dozens of people gathered for the service, with bright green balloons adorning the walls along with large photos of Peter.
His cousin Jye Dodt said while Peter was "always up to a little no good", he was a hero who fought until the end in hospital, which allowed his father to say goodbye.
"Peter was our little hero who was always there to lend a helping hand," Mr Dodt said.
"Peter had his life taken too soon in a tragic accident ... and in typical Peter fashion he was stubborn and fought until the end.
"Turns out he wasn't only our little hero, but it sounds like he attempted to help the other children on the jumping castle as well."
A poem written by Peter's mother Miranda McLaughlin was read out to mourners.
"No words can express the loss that I feel, I'm sure it's not possibly real. You left behind your heart and soul, never will our hearts feel whole," the poem said.
"Forever young and free you will be, fly high little man and remember me, love Mum."
Peter's teacher Gaye Kelly described him as an avid learner who was organised and took "great pride in his work".
He played a policeman in this year's school play and had ambitions to become an officer when he grew up, she said.
"He came to school the day after the roles were allocated with a toy gun and a sheriff's badge to add some authenticity to his character," Ms Kelly said.
The service ended with photos depicting Peter's short life and a video of Peter saying "you're stuck in eternity with me".
Two boys badly injured in the accident were moved out of intensive care last week after their condition improved from critical to stable.
Funerals for Jalailah Jayne-Maree Jones and Addison Stewart will be held in Devonport on Thursday and Friday.
More than $1.4 million has been raised for the families via an online fundraising page, while the federal government has committed $800,000 to counselling and support for the region.
The Devonport City Council is collecting countless tributes left outside the school to create a permanent memorial.
The coroner is investigating the circumstances around the accident and will receive reports from Tasmania Police and WorkSafe Tasmania.
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