"Toning" is a very misunderstood term. There are two things you can do to alter your physique:
1. Build/lose muscle mass
2. Gain/lose fat mass
For the typical untrained person, "toning" is essentially a combination of building muscle and losing fat. You need to build a small amount of muscle mass to give shape to your physique. At the same time however you need to lose the fat that surrounds that muscle mass so you can actually see the definition of the muscle.
Toning, shaping, sculpting (and all those other fancy terms) are all synonymous. Build some muscle, lose some fat is the bottom line...easy as.