Should this not be "Spielzeuge sind hingegen sinnvoll" if the subject is "toys" and not "toy"?
Not necessarily. 'Spielzeug' can refer to a single toy and to a group of toys when they are viewed as a single group. If you want to stress the mess, 'Spielzeuge' does also work.
But why is "toy" wrong then? I guess you could make that sentence in English with "toy", or at least "the toy"
Without an article, the German 'Spielzeug' refers to more than one item.
Can someone please explain how "ist" is plural?
please read the comments above.
think of it like "hair" in english. Hair can be one hair or a lot of hair but in both cases you use "is" not "are"