It makes assures that how many times variables and nets toggled? Toggle coverage could be as simple as the ratio of nodes toggled to the total number of nodes.
X or Z --> 1 or H
X or Z --> 0 or L
1 or H --> X or Z
0 or L --> X or Z
Above example shows the signal changes from one level to another. All types of transitions mentioned above are not interested. Only 1->0 and 0->1 are important. Toggle coverage will show which signal did not change the state. Toggle coverage will not consider zero-delay glitches. This is very useful in gate level simulation.
Toggle coverage report of the example:
Name Toggled 1->0 0->1 a No No Yes b No No No c No No No d No No No e No No No f No No No