I read about it recently.
Basically it said that if your home made toy is made from wood and left unfinished (no paint) testing is not mandatory.
They mainly test for lead content in paint and phalates content in plastics/rubbers. If your product contains any of these you have to test it.
There was something about small parts too…safest way to avoid trouble there is to mark your products suitable for ages 3+.
This potentially very expensive testing has put one of my own ideas on hold. Small volume manufacturing just isn`t profitable that way 