A toon is a synonym for a character in a video game that is a role-playing game, usually used only in the context of Massively Multiplayer Online Role-playing Games (MMORPG), such as World of Warcraft.

Character, avatar, or toon are synonyms in this context.
(Avatar is a misnomer, however.)

In role-playing games, a great deal of effort is spent in creating a unique persona or character before play begins. During character generation, the player makes choices that will affect the gameplay, such as appearance, name, gender, race, and class. Once created, these characteristics are immutable, as they define the play experience. The selection of class determines the strategies the character will use to succeed.

In short, Role-playing games have great replay value because a player can re-experience the game using a new character or toon.

ETYMOLOGY

Toon is presumably a contracted form of cartoon; video game characters are animated, after all. The origin of this term can be attributed to the standard root of all leetspeak (internet jargon): a need for efficiency for lazy typists.

Toon is probably used because it is shorter and easier to type than the word character. Anyone familiar with these games can easily surmise the meaning of the term from context. Furthermore, the term avatar is avoided as it can possibly create confusion. In roleplaying games, avatar also refers to the incarnation of a deity.

The term retards use to describe that they have an alt or a character on a mmorpg. You know how STUPID TOON sounds? Jesus...

Toon, usually referred as a character in an online role playing game. Also known as an alt, or character.

Or, something an idiot would say

The most annoying thing you can ever call one of your video game characters, often used in World of Warcraft by tools.

the word "town" spoken in a geordie accent sounds like the slang term "toon." newcastle's football (soccer) fans are known as the "toon army" - this led to a sky sports presenter being fired recently for using a shockingly poor taste pun on "tsunami" which i'll not repeat here.

1. A character that one creates in a video game. The origins of this term are unclear, but may be related to the second definition.

2. In the film Who Framed Roger Rabbit (1988), an animated film performer who inhabits the human world but is not human (examples: Roger Rabbit, Jessica Rabbit). A shortened form of "cartoon."

a short form for cartoon.
It became a popular way to refer to a cartoon character in the 1981 Gary K. Wolf novel Who Censored Roger Rabbit?

Newcastle upon Tyne, UK