Toon is material that can be thinned or painted in Wasteland. Many obstacles require you to thin your way through an area or find another way around it. All things are made from this material. Even all the cartoon characters we know and love from the multiverse are born from this material.
Inert is what Toon become when all paint is sucked out of the object. This could also occur to a living Toon since they are made out of paint too. For example, in the first game Ortensia was in an Inert state. Inert objects cannot be painted or thinned.