If you're a broker/dealer, you spend a lot of your time facilitating other people's trades. By "facilitating" here, we mean that you don't only put their trade on the market for them, you often trade with them "on risk" by taking the other side of their trades and then unwinding them. So if you want to sell 1000 tesla I might (as a broker/dealer) just buy them off you and look to sell them myself later either at market or directly without touching the market as part of executing someone else's trade later. This is more efficient for everyone as it means you don't pay the exchange fees for those trades you can "cross off" against a colleague or another client and therefore can offer a slightly better price to the end client. It also allows traders to manage the market impact of big orders more effectively, allowing large trades to be completed without moving the market as much.
If you're large enough, your client base represents the market generally. That means your client base by definition doesn't outperform the market (ie has zero alpha). So that means that facilitating their trading earns you the commission and the trades you have to unwind have net zero alpha. This is not entirely true because it ignores some important effects around how commissions work etc (which end up meaning that broker/dealers are structurally long the market in general) but is not false enough to matter for the purposes of this discussion.
Imagine you had one client who knew the future (ie every trade they made would make them money). By definition taking the other side of that trade would therefore lose you money. Their orderflow would be "toxic" - by trading with them you would always lose money.
When someone says that orderflow is "informed" what they mean (usually) is that the people making the trades have more information than the rest of the market and therefore will trade when beneficial to them which is likely to be net/net not beneficial to you (if as a broker you're on the other side of the trade).
Now, whether or not robinhood order flow is on the whole informed or toxic is another question. Personally I would be surprised if that turns out to be true but I could be wrong.
The "large enough" argument does not work if you explicitly or implicitly filter or stratify the input to your sampling function. Just like law of large numbers does not work for heavy tailed distributions directly.
In which case your client do not represent the market, either by volume, or by number.
If you can actually know in which ways your sample is different, you can play it then against the market.
Robinhood would optimize its input for small clients with less knowledge, or clients looking for highly speculative risky plays of smaller volume. These are very specific characteristics that likely differ from general market.
I'm not talking from the perspective of RobinHood, I'm talking about the broker/dealers who provide execution services to RobinHood. RobinHood is nowhere near large enough to have a client base which represents the market. JPM, GS, MS etc are.
"Informed" in his context means based on new research/news/information, implying that the market is more likely than not to subsequently move in the direction of the trade.
A "toxic" position is one that has a high chance of moving against the holder. Taking the opposite side to informed trades might be toxic, but taking the opposite side to the first buy trade in a series of a hundred by a big mutual fund company who decided they like a stock is definitely toxic because they will continue moving the price higher with each trade -- so the brokerage doesn't want to keep these short positions on their own books but source them in the market.
If you're large enough, your client base represents the market generally. That means your client base by definition doesn't outperform the market (ie has zero alpha). So that means that facilitating their trading earns you the commission and the trades you have to unwind have net zero alpha. This is not entirely true because it ignores some important effects around how commissions work etc (which end up meaning that broker/dealers are structurally long the market in general) but is not false enough to matter for the purposes of this discussion.
Imagine you had one client who knew the future (ie every trade they made would make them money). By definition taking the other side of that trade would therefore lose you money. Their orderflow would be "toxic" - by trading with them you would always lose money.
When someone says that orderflow is "informed" what they mean (usually) is that the people making the trades have more information than the rest of the market and therefore will trade when beneficial to them which is likely to be net/net not beneficial to you (if as a broker you're on the other side of the trade).
Now, whether or not robinhood order flow is on the whole informed or toxic is another question. Personally I would be surprised if that turns out to be true but I could be wrong.