drop off

In Wolf Hollow, by Lauren Wolk, Annabelle lived in a farmhouse:

Annie Gribble lived in a small house that we passed on our way to market. I’d only been there once, to drop off a bushel of peaches at canning time, but she’d invited us in for a glass of lemonade, my father and me, and I’d been fas- cinated by the switchboard that dominated her front room like a loom strung with thin black snakes.

Does it mean that peaches were being canned at the market, so she was delivering them there?

The peaches were dropped off at the small house. That suggests that Annie Gribble cans them there. "That we passed on the way to the market" tells us something about where the small house was.

"Drop off" means to deliver something, generally as a stop on your way to going somewhere else.

So if I borrowed a book from you that I have finished reading and I'm going to the store to buy a shirt and I know your house is near to that store, then I might go to your house first to drop off that book (deliver it back to you) before going to the store. It's more convenient than making a separate trip just to give you the book.