UPDATE - thank you very much to Michael Pick and his wife for the following clarification on what a Omochae/Toy Picture is: "From what we could gather they were mostly used for teaching/storytelling - there's an example of one in use here for instance which speaks volumes and the text backs up the contents of the illustration. The translation is correct - they were called "toy pictures". Some of them have the names of places and characters, so I assume those would have been used in the telling of stories, historical or otherwise.
I'd be willing to wager that they're related to the similar practice of kamishibai ("paper drama") a simple variant of the magic lantern show/slideshow/proto-cinema/animation. This usually involves/involved the telling of a story with a bunch of illustrated cards. Wikipedia has a little entry on it..."
-
The entire collection is at the rare book section of the Japanese National Library [link]