The TOSLINK standard is the result of the convergence between the digital and fiber optic worlds.  Its true origins began with the development of digital audio standards.

SPDIF - The Origins.
In 1980, Philips and Sony jointly proposed the compact disc standard.  Part of the standard included the ability to transport data in the digital domain between components.  The acronym S/PDIF stands for Sony/Philips Digital Interface.  By 1983, Toshiba had entered the foray with an optical transmission protocol based on the use of light.
 
TOSLINK - Also known as EIAJ Optical
TOSLINK signals have exactly the same format as the electrical S/PDIF signals except, instead of using high/low voltages on copper to represent the binary 1’s and 0’s of digital information, TOSLINK utilizes a series of on/off pulses of a red transmitting light.  There are no lasers used in audio optical digital transmission.  The light source is a simple and inexpensive LED.  Until recently a major drawback of fiber optic transmission was attenuation within the optical cable.  Reliable transmission distances were limited to 10 meters, in actual application the practical limit was often under 5 meters. One of Toslinks interface’s advantages is its immunity to RFI and EMI.

What to look for in a TOSLINK Cable:
There are three factors that draw the line separating mediocrity from excellence: purity of the optical conductor, clarity of the optical termination (lens), and flexibility without signal loss.  When each of these parameters is optimized, and the interconnect is used with quality components, the TOSLINK connection is audibly indistinguishable from copper coaxial S/PDIF. The optical fiber material itself must be completely transparent, which can be made either of plastic or glass. Quality TOSLINK interconnects must also feature a highly polished and properly fitted termination.  The purpose of the jacket is to ensure the signal integrity, acting as a non-reflective cladding.  The actual thickness is less of a concern so much so as it ability to maintain the cable’s conductive core round and safe from external impact.  The two main styles of connection are 3.5mm jack, similar to a 3.5mm audio connection, and the square standard toslink jack.  The toslink jack has been designed to ensure positive engagement, using a tab ears that snap into the plug.