The system knows when it is at all times. It knows this because it knows when it isn't. By subtracting when its peers are from when it isn't, or when it isn't from where its peers are (whichever is greater), it obtains a difference, or deviation. The NTP subsystem uses deviations to generate corrective skews to update the system clock from a time when it isn't, and arriving at a time when it wasn't, it now is.
