It means that the value proposition at face value seems preposterous to most people, e.g "watch some guy walking around the entire day" (justin.tv) or "watch some random guy play a video game" (twitch). Where someone thinks later, "Who the hell would have thought that would have been a business".
It's also sometimes used for something someone did for "shits and giggles" or as a side gig instead of spending more time on their serious day job or "primary project" (i.e. all those internal tools that grew into products).
In the Innovator's Dilemma, most paradigm-breaking developments are often described as 'toys'.
What value does VR provide? Cool things get funding all the time. Just make sure that you pitch it right.
From the referenced article:
> Don't be discouraged if what you produce initially is something other people dismiss as a toy. In fact, that's a good sign. That's probably why everyone else has been overlooking the idea. The first microcomputers were dismissed as toys. And the first planes, and the first cars. At this point, when someone comes to us with something that users like but that we could envision forum trolls dismissing as a toy, it makes us especially likely to invest.
Organic Startup Ideas - http://paulgraham.com/organic.html
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It reminds me of another article:
The next big thing will start out looking like a toy - https://cdixon.org/2010/01/03/the-next-big-thing-will-start-...