See Toon in the Arnold User Guide for the full shader documentation.
The toon shader is part of a non-photorealistic rendering (NPR) solution that is provided in combination with the contour_filter.
The Contour Filter can be found in the Filter settings of the Render Settings window.
When adding bump to the Edge, you should also change the Edge Detection to Shading Normal.
Toon tutorials can be found here. A video that shows how to achieve a cross-hatching shading effect using the toon shader can be found here. A video that shows how to achieve a pixel art style using the toon shader can be found here.
Information about custom AOVs can be found here. An example toon scene (with AOVs) can be downloaded here.
A toon example scene file of the Sophie asset can be downloaded here.
Examples
RGBA (box_filter) and edges custom AOV (contour_filter)
Example use of base_tonemap
Ramp -> specular_tonemap
Multiple (blue and red) lights used for Stylized Highlight - 'directionalLightShape1;directionalLightShape2'.