This is one of my favorites along with the Mariette Hartley and Robert Lansing "Sandy" and the Agnes Moorhead-and-the-tiny-spacemen episodes.
It is an important take, from mid-1961, on the long Cold War that the U.S. was then embroiled in. The beaten-down city-scene, the near-starving characters' sparse dialog, their threadbare uniforms, and the minimal action "says" it all: the absurdity of an on-going conflict that threatens to destroy human life, modern civilization, and all that is sweet and redeeming about it.
It is a "fable" because it was made in a time in which, had events turned out differently, such as the second Berlin Crisis (Spring 1961) and the subsequent Cuban Missile Crisis (Oct. 1962), it would have actually been a reasonable representation of one of the U.S.'s major cities, ruined and replete with a few miserable survivors. I also see it as a "fable" because it is not only a cautionary tale, but because it is the most redemptive of all our popular myths: it is a love story, set in an impossible situation, and involving two highly mismatched lovers.

You get a gift. It is exquisitely wrapped. The box it is in is hand crafted out of the finest wood and shows skill down to the smallest detail. That is then wrapped in gorgeous paper, handmade and hand-painted by the most talented of artists. The whole thing is wrapped in ribbons made from fine silk lace. It is a sight to behold.
Then you cut the ribbon, rip off the paper, open up the box, and find...nothing. That's TOYS. You either enjoy the packaging, or forget about it.
The film isn't without its point and purpose: War is a not a good thing. Well, isn't that original! The moral is so obvious that it is almost embarrassing to even point it out. And even that feeble insight is undercut by a story in which elements of war -- war toys in particular -- are clearly a bad thing, until they need an exciting climax and the film simulates a war using innocent toys. It's like someone preaching a stern, condescending sermon, only to end by saying "Just kidding."
But even as an empty box, the film fails close scrutiny. Yes, it is a sight to behold with some remarkable, striking images. The sets are imaginative and the cinematography catches the colorful scenes with skill. But the images are cold and emotionally sterile. Like the screenplay, the look of the film is joyless and at times aesthetically barren and surreal. It is a film that wants to praise toys as wonderful and special things, yet shows them to be creations of a world that is empty and cold. The film strives to be funny, in a morose sort of way, but the humor is forced and artificial. Robin Williams, as the beleaguered heir to a toy manufacturing empire, tosses in his ad-lib shtick, which only seems alien to the bizarre, coldly structured world he is inhabiting. Indeed, the topical references and tasteless sexual innuendo that are scattered throughout are jarringly contradictory to the childlike fable the film is vaguely trying to be. For this film to work, or make sense, it needs to be set in its own universe, an Oz far removed from Kansas. Every time the jokes jerk us back into reality, the toyland of the film increasingly becomes an obvious sham.
It is said that this was director Barry Levinson's pet project, one that he had been striving to get made for ten years. It is sadly obvious why he had trouble getting backing. Like most pet projects that finally get made (RADIOLAND MURDERS, RADIO FLYER & BATTLEFIELD: EARTH being great examples) it seems to be a blind spot in the filmmaker's field of vision. Perhaps Levinson directed and redirected TOYS so often in his head that he no fresh vision for it when he finally got on the soundstage. He had already perfected it to death.
Many of the toys featured in the film are clumsy, mechanical, wind-up monstrosities. So is the film itself.