This is a very deep question and I find it hard to answer in one post. I will sum it up for what it means in my life.
1 Peter 3:
To live a life that is pleasing in all areas. That means studying the Word of God to find out what pleases Him. According to 1 Peter, I have been redeemed, bought, purcahsed, made free by Jesus and His work on the cross. I did nothing to deserve this, and I am eternally thankful. Because of this, I want to make sure that my ways please Him. Meaning I would rather err on the side of "extreme and it doesnt take all that" than to have an "anything goes" attitude.
In my life it means:
There are certain movies that I dont see, I make a serious effort to watch my language, clothing, thoughts... I fight daily to make certain that my ways please God... not because my ways would ever have a chance of saving me, but flows out of a desire to be found pleasing to Him.
My litmis test usually is: if the world is celebrating it I think REALLY hard about it. Generally if the world embraces an idea it is not ideal for the Christian redeemed Holy woman of God.
Lord knows I have such a long way to go.