Can you take a picture, too?
Yes, I believe thatās the culprit, even though the affected fruit usually also dries or rots.
Just out of curiosity, have you sprayed with fungicide at any point?
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For what its worth, my seedling trees that I consider a failure (which werenāt many really) were failures because the peaches never got bigger than a golf ball- so a little bigger than yours but not much. HOWEVER, the whole tree was like this. I canāt fathom why some would be small and others not- tree would have same genetics all over.
Also, Iāve dealt with severe brown rot for many years. Early, mid season, and at ripening. It has never once affected the SIZE of my peaches. Either it causes blossum rot so they fail to set, or it shows up after the fruit are full sized and causes the brown fur (āmoldā) than can wipe out every peach on the tree in a short time, especially as they ripen. But Iāve never heard or or experienced it causing the dwarfism you are experiencing.
No disrespect to @Tana , we all know fruit can do different things in different places, climates, disease pressures, and so on. Just saying Iāve never seen or heard of a correlation between BR and peach size myself.
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Yes I sprayed and was able to successfully control brown rot but still got a little scab. For what its worth I looked back and took pictures of one of the eating size peaches from this seedling peach tree. Its dated July 20th and the peach was tree ripe, with no brown rot present.
The eating sized peaches we got off the tree were very good. So good my wife wants to keep the tree and asked me to not graft over it ( happy wife / happy life 
). I really would like to know what the cause of this treeās strange behavior is and if there is any remedy. If it were limited to a branch I could work around that, but its not.
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I asked, because that may have stopped both monillia and scab. Still, in the picture with the tiny fruit, you can see some dark spots on the branch. It could be, that the peaches on affected wood got fed less than necessary at the time when they should have been plumping up.
This was the first year this seedling peach tree bore fruit. We did have the 17 year cicada brood here and they were so many cicadas it would have been impossible to count them all. The cicadas did a number laying eggs in the scaffolds of all of the orchard trees. This seedling peach did not escape the cicadas. Thatās what the dark spots are you see. They are tree wounds from female cicada egg laying I believe.
Thank you very much for replying.
It can always be more factors than one. Anyway, you got some nice fruit and your tree did survive brown rot without fruit deliberately rotting or branches dying. That sounds like one promising seedling.
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Brown rot is a tough oneā¦ I need to step up my game and play hard ball with it. Iām kind of at a loss as to what to use. I was able to contol it with copper, captan and sulfur but it was far from easy. There has got to be something better. What do you recommend? And thank you again for replying.
Spray before and after bloom. Iāve heard some advice to spray also after the tree goes dormant when it was a bad year and remove any mummyfied fruit beforehand .
I have given up on conventional peaches and only grow the mostly resistant Weinbergpfirsich.
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That is not to say it would do well elsewhere, but it is the most hassle free peach in my region.