Real life toys are toys that mimic "real" grown up things. These toys can range from play kitchens, to tools, to baby dolls, to phones. Anything that is a mini (child sized), toy version of the real thing.
Real life toys are great for role type playing. They allow a (almost) three year old girl to become a mama, a four year old boy to become a "worker", and a seven year old boy to become a pizza delivery man.
Real life toys allow children to act out and copy the things that they see grown ups do. They encourage looking to the future, as well as acting out dreams.
Real life toys can be great for parents (and/or daycare provders) to learn from, too. Sit back and watch, you just might see yourself through a child's eyes.