I want to tackle a different route than the given answer which found a toaster in the set. Not because that answer is incorrect (because it does solve the issue), but rather than I think your question derives from how you've defined your own words.
should they even know what a toaster is?
You've sidetracked yourself into defining a "toaster" to very specifically use our real life technology, which is leading you to assume that a more futuristic version of the same device would not be a "toaster".
Bread exists. Bread can be toasted. The machine that toasts bread is called a toaster. This remains true regardless of the technological level of this machine. Whether it uses heated coils, kyber crystals, miniature dragons, nanotechnology, or opens a microportal to the sun.
Unless you are alleging that toast (whether bread or anything else that can be toasted) does not exist in the Battlestar Galactica universe, I see no reason to infer that toasters do not exist.
What's more important to understanding the insult is what a toaster represents relative to a Cylon.
The reason "toaster" is an insult is not because it's referring to a device with heated coils (i.e. how we build toasters in real life), it's because a toaster is a common everyday machine incapable of any other purpose other than what its designer intended for it to be capable of, which is significantly simpler than the capabilities of a living machine, which would be able to learn new things and through its learnings start to self-identify.
The word "toaster" debases the Cylons and devalues any shred of capability or identity that they have. This is no different from calling a human a meat sack or a knuckle dragger. This is the same principle as e.g. referring to women as cooks or maids or mothers, i.e. stating that they are limited to a small scope and either incapable of achieving other things or willfully ignoring any of their other achievements.
The reason "toaster" is used here is because of the dime-a-dozen nature of the device. If toasters were expensive state-of-the-art machines that are considered to be a impressive technological feat, it would not be an insult.
For example, if I were to refer to a Cylon as a Ferrari, that is technically still the same insult (because it's still a machine built for a single purpose), but it doesn't quite cut the same way because a Ferrari is an exceptionally well-made machine, hard to come by, and revered by many.