For your first visit half-day should be enough to get acquainted with the city and its major sights.
Distances are walkable in all cases, you will need public transport only to/from bus or train station.
Worthy attractions: Cathedral; Sinagoga del Tránsito; Sinagoga de Santa María la Blanca; Iglesia de Santo Tomé; Monasterio de San Juan de Los Reyes; San Christi de Luz.
Left for another visit: Museo de Santa Cruz; Alcázar; Casa-Museo de El Greco.
Last visit: November 2016.

Toledo is such a beautiful and full-of-history destination that it probably warrants more than an intraday trip from Madrid, but its exploration is unlikely to be undertaken as anything but such trip.
The medieval melting pot of Christian, Muslim and Jewish cultures, Toledo was for a time one of the most important cities in all of Europe. Its historic center, dramatically sitting behind old walls high on a hill above the River Tagus, offers a lot of the city’s rich history on display.
The most remarkable sight in Toledo is its massive Cathedral ♥♥♥. Its interior is nothing short of splendid, full of decorations and artifacts, with several pipe organs built in different styles. Brilliant stained glass windows and frescoes are present throughout the cathedral. In the choir, every seat is marked with a unique carved sculpture. In the cardinal picture gallery, two portraits by Goya always get the dismissive reaction from the tourists when compared against more “realistic” other portraits.
We spent most of our two trips to the city strolling along its streets and taking in the sights. Of the attractions open for visiting, we only stepped into a couple. Sinagoga de Santa María la Blanca ♥♥, the oldest and largest of the city’s eight original synagogues, is now restored to its maiden beauty, with its mudejar columns and remains of Catholic frescoes. On our last visit, in 2011, it held an exposition of Jewish symbolism.
Another temple, Sinagoga del Tránsito ♥♥, impresses with its main prayer hall with high ceiling, but it is also a great museum of Jewish history and customs. Several rooms has various objects on display, accompanied by good tour booklets in various languages.
Monasterio de San Juan de Los Reyes ♥♥♥ boasts beautiful cloisters and church (which is the extent of what you can see inside).
The ancient mezquita San Christi de Luz ♥ is another point of interest. For a look from above the city, climb the tower of Church of Jesuits ♥.
The painter El Greco spent the second half of his life in Toledo, and there are a number of his works in various city churches and museums, as well as a Casa-Museo de El Greco. I cannot say that I am a huge fan of his painting style, and we bypassed the museum. But we did step into Iglesia de Santo Tomé for a quick look at one of his masterpieces, The Burial of the Count of Orgaz.
More of El Greco’s works, along with other works of art, can be seen in Museo de Santa Cruz, which we also passed up. One other potential attraction, Alcázar, is the main army museum in Spain, replacing Madrid’s Museo del Ejército.
Toledo is a suitable place for a museum of arms. Its souvenir shops are full of swords, knives and such. I don’t know anyone who comes back from a visit to Toledo without at least a picture of him/herself wielding a heavy sword; some return with the actual weaponry.
Transportation logistics
There is a high-speed AVE link between Madrid Atocha and Toledo, taking only 35 minutes one way. It is, of course, more expensive than the regular train, and the trains run hourly during rush hour (which is in the opposite direction in which you will be traveling, to Madrid in the mornings and to Toledo in the evenings), but only once every two hours at other times. You also need to buy tickets in advance to ensure that you can get on the train that you want, but this is by far the most convenient way to get there.
The regular train service from Madrid runs once every couple of hours and takes an hour and a half to complete the journey one way. On our first visit in 2004, we opted for a bus journey instead, which takes about one hour and fifteen minutes. The comfortable, air-conditioned buses depart from the Mendez Alvaro bus station (eponymous metro station) every 30 minutes. From the station in Toledo you should opt for either a municipal bus or a short taxi ride to the city center.
Places to Eat
We stopped for lunch at Adolfo Colleccion Perdiz on Calle Reyes Catolicos. Nice atmosphere and fairly leisurely service. The food is pretty good, although gazpacho was probably the simplest of all that we tried. We also ordered local pork dish, beans and meat soup, baby squid, venison sausage and the selection of tapas, the latter including potatoes with fish, fried cheese, mushrooms, venison and a cake with ice cream. We separately ordered local dessert specialty, marzipan cake. The damage: €98 for 4 people. Last visit: Spring 2011.
On a different visit a no less random choice was Gambrinus on Calle Santo Tome. Sitting on a leafy square on a nice day is always a good lunch experience. The food was quite good, with no specific standouts. Last visit: Fall 2016.