I guess, a lot of people are misunderstanding him here.
Though it's pretty obvious that the word "toy" became a disguised insult (how and why it became this way I've attempted to answer here), Will Wright has used it in different meaning. Look at almost any book on game design and you'll find at least one chapter that discusses toys vs games in game design aspect.
In short, all games are toys, but not all toys are games. The rest part of entertainment software that aren't games usually called non-games or just toys in a restricted sense, though I prefer the former. Non-games serves mostly as sandbox that allows people to entertain themselves rather than follow a preset path of missions, some toys even do not involve gameplay to be fun (to some extent you may call GTA a toy). In fact, Will Wright is one of the few people in the industry besides his colleague (and, maybe, friend?), Shigeru Miyamoto, who actievly push forward and idea of "toys" in gaming. SimCity serves as best example, furthermore once he called it a toy himself and said that it more appeals to adults, which is true.
Wii and DS both have one of the best examples of entertainment software with "toyish" approach to game design, and this's definitely one of the strengths of software library of these platforms.