proper arrangement of npm workspaces and peer dependencies

I built a vue3 component library, which is the root of my folder

src/...
package.json

I added a demo app to the repository that just showcases components and aids in development of components.

src/...
package.json
demo/...
demo/package.json

I currently have the root package.json setup with

"workspaces": ["./demo" ]

I also made sure that any dependencies in the root that also are required in demo are under "peerDependencies".

In practice this is very flaky, I keep getting errors like

Vite Error, /node_modules/.vite/deps/shared-dependency.js?v=7ec6316e optimized info should be defined (x12)