At the beginning of his Foundations of Analysis book (translated from German), Landau writes in his Preface for the Teacher :
Peano defines $x+y$ for fixed $x$ and all $y$ as follows : $$x+1 = x' \\ x+y' = (x+y)',$$ and he and his successors then think that $x+y$ is defined generally ; for, the set of $y$'s for which it is defined contains $1$, and contains $y'$ if it contains $y$.
But $x+y$ has not been defined.
All would be well if - and this is not done in Peano's method because order is introduced only after addition - one had the concept "numbers $\leq y$" and could speak of the set of $y$'s for which there is an $f(z)$, defined for $z \leq y$, with the properties $$f(1) = x, \\ f(z') = (f(z))' \quad \text{for } z < y.$$
Here the prime denotes the successor function. I really don't understand why $x+y$ can't be defined the first way. In fact, Theorem 4 of the book, which is at the same time Definition 1, seems to follow exactly Peano's definition. But, the author actually proves unicity and existence of such a function $+ : \mathbb{N} \times \mathbb{N} \to \mathbb{N}$. He fixes an $x$ and shows unicity and existence for all $y$, so that given $(x,y)$, $+(x,y)$ is well defined.
The only difference I see between Peano's and Landau's definitions of natural numbers is that Landau's proves existence by induction on $x$ instead of $y$.
What's the subtlety here ? Why is Peano's definition incorrect ?
Something such as the iteration theorem should be proved first:
(P,S,1) is a Peano system
W is a set, $c \in W$, $g : W\rightarrow W.$
Conclusion: There exists a unique function $F: P \rightarrow W$ such that
(a) F(1)=c
(b) F(S(x))=g(F(x)).
One can then apply the iteration theorem to $W=P$ and $g=S$ in order to obtain the existence of a unique binary operation + on $P$ such that
(a) x + 1 = S(x)
(b) x+S(y)=S(x+y) for all $x,y \in P$.