Since I don't think anyone has specifically answered this question yet, I will:
"Toon" is a MMORPG slang term used to refer to a player's character. It is short for "cartoon".
e.g. "My main toon just hit 70, so I think I'll roll up a new toon tomorrow."
I assume the etymology is simply that characters in any 3D graphical world always look, to one extent or another, like cartoon characters; so lazy players started typing "toon" when referring to them rather than "character" or even "cartoon". As far as I know, the term is only used for a player's character, never for an NPC or monster.
Which, of course, brings us to the worst piece of MMO slang ever invented:
"Mob", as most of you are probably aware, is a catch-all MMO slang term that refers (depending on the user) either to any "hostile" or "dangerous" NPC entity in the game world or, sometimes, to any NPC entity whatsoever. The first usage, I believe, is more common.
e.g. "If I kill about a dozen more mobs I'll level-up."
Merely saying this word leaves a gross taste in my mouth. The first time I heard someone use it I wanted to wretch. And, naturally, given the popularity of MMO games these days, the slang used by those who play them is slowly becoming ubiquitous in all areas of gaming. It's already reached the point that terms like "toon" and "mob" are making frequent appearances on D&D forums; and, I'm sure, a significant number of gaming groups now have at least one member who use such language regularly.
If anyone at my game table ever refers to an orc as a "mob" I'll beat him to death with his own shoes.