"Toning it down" means doing less of something, or making something less extreme.
You can "tone down" a lot of different things. Here are some examples:
- If your children are playing really loudly, you can ask them to "tone it down", meaning to play more quietly.
- If someone is playing a sport really aggressively even though it's not a serious game, you can comment that this person should "tone it down", meaning to play less aggressively.
- If your boyfriend usually likes to talk a lot about politics, you can ask him to "tone it down" when you bring him to have dinner with your parents.