Yes! I chucked out most of the toy storage in favour of billy bookcases when my kids were about 4 and 2. I think it worked well for us. When they had a whole expedit cube of games they didn't touch them, but when they only had 5 to pick from, suddenly they were using them all the time. I think too much choice is paralysing - just too much to process - and I do think that applies to books as well as toys. The idea of gazillions of books sounds lovely, but you wouldn't bury their favourite soft toy in a massive stack of other toys like a needle in a haystack, so why do it to their favourite books? One shelf or a not-over-full sling bookcase is enough choice for a toddler IMO. Favourite books stay, ones they ignore get rotated out.
I also limit volume of any one thing. For example we have some great train track but also lots of random trees etc with it that neither child was interested in. I got rid of those and just kept the good bits. Ditto eg small world animals. A green trofast tray is a good volume for that (and great storage because DC can manage it and see all the contents at a glance). If you have more than fit on that, edit the collection, just keep the best bits. I'd agree with PP that there's grounds to break this rule with very favourite toys - with DS it's Yoohoos. They are all special to him, they're all staying, and he'll get another for christmas.
One thing I was conflicted about was Happyland. DC had a house, a farm and a mini shop. I felt that was enough for one home. Having more sets would be a lot of money and storage volume, but it would have opened up a lot more play options.
Finally there's a lot to be said for generic stuff that can be mixed in other things, and for encouraging the mixing IMO (although this does create mess). So wooden blocks, jenga, a selection of cardboard boxes, stacking cups, toy crockery, scarves are a good stockpile. DC might extend the traintrack to include a hill or making Peppa Pig's house for the Happyland people to visit from a cardboard box. My eldest had a brilliant imagination and loved a big pile of cotton reels, threading beads, mosaic tiles, dominoes etc. These things could be anything in her head and she spent hours transferring them between bags and boxes, spreading them on the floor etc, casting the "stuff" as whatever she needed for the game. Messy but tonnes of play value from something really simple.