To be fair, the correct term for anything is what people call it. When movies like "Toy Story" came out, the term 3-D animation was used. But, well, it wasn't really 3-D. Let's define some terms.
3-D means "Three Dimensional". And that's the physical world we live in. So, to be really accurate, nothing that is represented on a flat screen can really be 3-D. We live in the three dimensional world where you can walk around things. By the way, 2-D (two dimensional) is the representation of 3-D, that is, a drawing or a painting. There really is no such thing as 1-D (it would just be a point in space), and the fourth dimension is time. The Fifth Dimension is a singing group from the 1960s.
So really, the correct term for a movie like Toy Story should have been "much more realistic animation with excellent lighting and shading." Not as catchy, I guess. And if you're wondering about modern 3-D movies, that term is wrong, too. Movies that you watch with "3-D" glasses are actually stereo vision, not 3-D. A very realistic and convincing illusion of the three dimensional world, but still 2-D. You can't actually get up there and walk around in it. It just looks like you can.
Artists have been creating the illusion of the three dimensional world ever since they picked up a paint brush. It's always been amazing, and it's always been an illusion. If you want to experience true 3-D, go take a walk around the block.