Peace is just that, freedom from disturbance, tranquility. "Good will" is a phrase that means friendly, helpful, cooperative feelings or attitude. You may also hear the phrase"good will towards man"

The first is a fantasy, and the second is a condoling reality. To more directly answer your question, you are right to want to treat the words together. When this phrase is used, the precise meaning given it by the words which compose it are not so important as the meaning given it by its common usage. It is generally used to express idealized unity and love towards one another, and brings to mind a kind of utopia. Perhaps it is merely the influence of my generation, but it tends to bring to mind hippies. If used as directly relating to a person and not as some abstract idea, it simply means what it denotes.