My 2.5 year old son skin round his toe nails is peeling off and always have sweaty feet, he also drinks lots of water and pee a lot, what can it be?

2 different issues. The peeling skin is probably the result of the sweaty feet and a condition called dyshydrotic eczema. I treat this with moisturizing skin creams and "air time". The skin needs to be moist but able to breath. With shoes, cotton socks need to be worn to absorb excess moisture. The drinking and peeing is more likely behavioral than anything else, but a quick urine test will do more to reassure you.
Has he seen doctor? The sweaty feet and peeling skin may be unrelated to the other concerns -- could be a form of eczema; his doctor can look at his feet and be able to tell. Regardless, if he hasn't been checked by his doctor for the drinking and peeing, please have him evaluated (including checking his urine for concentration defects, sugar, etc.) to make sure there are no underlying health issues.