The only requirement for making peace is (NEUTRAL ENDING):
Skull Emblem + Soul Emblem (underground city auction) + the bloody cloth + visit the mysterious dragon within the magical paintings.
1. Get the Soul Emblem and Flo in the Demon City. You have to beat the two underground Dungeons first.
2. When taking the last (act5) quest of the war (after Thane got badly wounded and the fight at the tavern), make sure to visit the tavern and the bull village until you recieve the bloody cloth.
3. Go into the hidden room of the bull-temple and enter the painting several times. You need two emblems to enter the painting and the bloody cloth to acces the important cutscene after 3 visits. In the Cutscene the MC will follow Thane to a cave.
4. You can now find the "!" new cave in the northern parts of the map. Kill the Boss and the war will end.
5. After the peace-treaty is signed talk to the leaders and also explore several location on the map, including the waterfall that lead to another "!" location.
The good ending got many diffrent variations. The perfect good ending depends on player preferences and is somewhat subjectiv.