What can Peach's neutral special (Toad Guard) actually block?

Solution 1:

Short answer: Any attack or projectile.

Ordinary counters in Smash Bros. (including Peach, Marth, Corrin, etc.) are activated by any ordinary offensive hitboxes, i.e., attacks which deal damage upon connecting. Projectiles and physical attacks both have this property, and Peach can counter both.

Note that counters are activated regardless of whether the incoming attack causes flinching/knockback. Fox's laser, for example, can trigger a counter.

Examples of non-offensives hitboxes which don't activate counters include wind, water, and grabs.

Certain hitboxes have an "unblockable" property. Unblockable hitboxes will hit their target even if they are shielding or countering. In Melee, I suspect most unblockable hitboxes are found in stage hazards, such as the acid in Brinstar. In later Smash games, many items and Final Smashes are also unblockable.

Source: playing a lot of Smash and having experience modding Brawl movesets. I'm not familiar with Melee's "offensive collision" (hitbox) definitions specifically, but I have good reason to believe they're pretty much the same.