Of course, this means that customers always choose that option, and FBA sellers get harmful demerits on their account every time that happens. This is such a popular way to hurt FBA sellers that people have a habit of ordering items from competitors just to return them as counterfeit and/or defective, in the hope that doing this a few times will get a competitor removed from the seller pool.
Just conjecture at this point as I don't think any non-Amazon employee could know exactly all the details around when Amazon decides to charge a return handling fee, etc. I guess this may be in the fine print somewhere, but I would rather expect the fine print just to say "We can charge you a return handling fee if we want".
My experience is that I tried to return something last year, and Amazon was going to dock 12 dollars of my 14 dollar refund for return shipping if I clicked anything other than "defective". The product wasn't defective so I just decided to keep it, not worth the hassle for a $2 refund.
Did you order from a third-party FBA seller? If you did, they will often tell unsatisfied customers to keep the product and issue a refund anyway, because they'd rather be out one unit than have a return against them.
If most users start doing returns, they won't be free or even possible, given how much logistical nightmare that will be.
Beyond all this, that turn around time to buy a single product will be high.
Stores offer a good middle ground, and you can get a good hold of things before you actually make a purchase. I'm not saying toy purchase or any other purchase online will go down, but there will be a lot of buying will be waste.
Would this nightmare be worse than unlimited 1-day shipping? Amazon seems to have worked that one out already.
Most places would allow you to print a label and leave the item at a designated collection point. In the UK there's heaps of companies handling this (CollectPlus, MyHermes, ParcelPoint, even Post Offices).
I doubt this is true for anywhere but North America.
Sometimes they even let you keep the item. I barely buy anything from them, but I had that happen earlier this month with an item worth ~30€, despite choosing the option that indicated it was my fault.
You generally pay 3,90€ for returning the item via DHL/Hermes (unless you declare the reason for return as e.g. not working). Certain categories (clothing) have free returns. This is only the case if the order was placed through FBA or Amazon itself. Marketplace sellers with their own fulfillment usually charge you for returns or don't provide a shipping-label at all.
(source: selling on AZ)
Meanwhile, it's not like you can really test a toy in a store, and returning it means another trip.