I'm seeing stuff elsewhere about how it unlocks all characters during free play or allows you to play as special characters, but I still have access to all characters with it disabled, and I can't see how to access these extra character's.
2 Answers
Worked this out. The critical difference is between the characters you can select from the menu (hold Y-button on X-box) which (LB/RB on X-Box), which allows you to cycle through a small subset of characters.
As this answer says the Extra Toggle allows you some extra odd-ball characters, but only affects the LB/RB set.
Extra Toggle gives you access to some bonus characters on certain levels that you can't play as otherwise. The characters usually don't have any real advantages; they're just there for fun.
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