It's linked to what they would do in the wild. As predators, cats have the 'hunt-eat' behavioural pattern hard-wired into their brain. In pet cats who have food given to them and don't have to hunt to eat, this is no different, but their toys take the place of prey in terms of fulfilling their need to hunt.
Cats may also have one or more safe places where they will hide or bury food that they aren't going to eat straight away, in house cats their food bowls fulfil this role, and you will also see them pawing at the ground around their bowls as if they are trying to cover their food, and to scent-mark the area as 'theirs'.
So a cat will hunt its toy 'prey', but the toy can't be eaten, but instinctively once it has succeeded in the hunt, it will want to store the catch (after all, he's not going to eat it!) in that safe place. The toy fills the role of prey, even after it has been 'killed' but because it cannot be eaten, the cat will take it to the safe area to bury - it has now become toy 'food' (until the cat wants to use it as 'prey' again
That's my take on it