A toy party is a gathering of various females who bring their own sex toys (dildos, vibrators, etc.), lube and soap and water. The fun begins when they "experiment" with these appliances on each other. It is a common practice in college and hints at lesbianism, however, pornography and topless pictures of males keep it a fairly heterosexual event, with more sexual liberation and feminism, which makes it less gay than a circle jerk.
Guy: Yeah, one of my female friends invited me to be a gag stripper for a party they were having. They were trying to hide it, but I'm pretty sure I saw at least one dildo and a bottle of astroglide. I think they were going to have a toy party after I left.