I just would like to know if there are any other benefits to Vnet
peering and when it was first introduced by Azure?
Virtual network peering enables you to connect two virtual networks in the same region through the Azure backbone network. Once peered, the two virtual networks appear as one, for connectivity purposes. The two virtual networks are still managed as separate resources, but virtual machines in the peered virtual networks can communicate with each other directly, by using private IP addresses. More information about this please refer to this link.
I'm trying to suggest that creating that number of Vnets is
unnecessary.
It depends on your company's need. If you want to connect two Vnets, you must create a peering tunnel.
VNet peering is between two virtual networks, and there is no derived transitive relationship.
In others words, if you want 3 VNets to be both interconnected, you need create 3 peering tunnels. Please refer to the similar question.