First, the author uses the word "peculiar" five times within the first three sentences. The repetition of the word helps the author alert the reader to the coming oddities. Dahl also progressively strengthens the word "peculiar" within those sentences. He does this by italicizing three words in a specific order. "Rather" peculiar, "very" peculiar, and "fantastically" peculiar.
The rest of chapter two, though, does not discuss any of the peculiar things that happen to James. The rest of the book is about the peculiar things that happen to James.
Chapter 3 starts it. James ran away from his two mean aunts (chapter 2) in order to cry. He didn't run far—just to the far end of the garden behind some bushes. While there, an old man approached James.
". . .an old man in a crazy dark-green suit emerging from the bushes. He was a very small old man, but he had a huge bald head and a face that was covered all over with bristly black whiskers. He stopped when he was about three yards away, and he stood there leaning on his stick and staring hard at James.
When he spoke, his voice was very slow and creaky. "Come closer to me, little boy," he said, beckoning to James with a finger. "Come right up close to me and I will show you something wonderful."
Dahl uses some great adjectives to inform the reader of the man's peculiarity. "Crazy dark-green suit," "huge bald head," "bristly black whiskers," and "voice was slow and creaky" are all wonderfully weird descriptors of this random guy. He does NOT sound like an average next-door neighbor.
Then he pulls out a white paper bag with crystal-looking things in it that move and make noise. James asks what they are, and this is the guy's response:
"Crocodile tongues!" he cried. "One thousand long slimy crocodile tongues boiled up in the skull of a dead witch for twenty days and nights with the eyeballs of a lizard! Add the fingers of a young monkey, the gizzard of a pig, the beak of a green parrot, the juice of a porcupine, and three spoonfuls of sugar. Stew for another week, and then let the moon do the rest!"
If that's not peculiar, then I don't know what it is. Chapter 3 ends, and chapter 4 begins with the old man giving James special instructions on what to do with the bag of "goodies." He tells to James to add water and 10 of his own hairs until they all start to bubble. Then drink it down, which will cause steam to come out of James's mouth. After that, "marvelous things will start happening to you, fabulous, unbelievable things -- and you will never be miserable again in your life." Then the man disappears into the bushes. So weird.
The entire three chapter sequence is great at setting the reader up for peculiar because Dahl paints such vivid pictures with the words on the page. It's not a single word, it's how those words come together and stimulate a reader's imagination.