Yes peeled potatoes that have turned brown are still safe to eat and does not mean they are bad or rotten.
The peeled potatoes that turn brown is caused by an enzymatic reaction.
There's no harm in eating those potatoes that turn brown due to the enzymatic reaction although they may not taste as good or look very good or appetizing.
I've eaten potatoes that have turned brown after peeling them because I don't want to waste them since they are still safe to eat.
You could put the browned potatoes in soups or stews where the taste may not be as noticeable but they are very safe to eat.