Pretty sure Europe is mostly multi-party systems where coalitions are the norm, so including North America the only two western countries where dual-party is the norm is the United Kingdom and United States (both use first-past-the-post which encourages dual-party systems).
That said, I agree on two party systems promoting toxicity, the Brexit debate in the UK which was a near-perfect 50/50 split was an extremely toxic period in UK politics and heavily influenced the 2019 election. It has got somewhat better in the last couple of years though.
It wasn't a near-perfect 50/50 split either. It was 52/48, which yielded a large margin of ~1.8M more votes to leave. Referendums in societies that only have them rarely will always be somewhere around the middle point, of course, as if there was already a clear majority in favour of one direction then it'd have been implemented already without the need for a referendum.
Do you use a different definition of two party system than I do, when I say 2 party system I mean "first past the post"-systems, see:
https://en.wikipedia.org/wiki/First-past-the-post_voting
and for which countries use that system: https://en.wikipedia.org/wiki/First-past-the-post_voting#/me...
The real reason is that politics, and especially the two party system in most Western countries, is based on polarization, e.g. blaming the other party for all the evil of the world.
It's not some abstract "politics". For left-leaning, it's about freedom for women to decide about their own body, about respect towards minorities and people coming from other countries, just to name a few. For right-leaning, it's about protecting families, cultivating the tradition, prosperity of the country, the right to defend oneself etc. Politics became almost a new religion.