I'm 45 years old, which means that when Star Wars first came out on Memorial Day 1977, I was all of 5½ years old. And, of course, I immediately started picking up Kenner Star Wars action figures, and did so for a good five years or so before I kinda grew out of it, I guess. I started with the normal ones; the Luke and Vader figures where the lightsabers slid in and out of their wrists like Wolverine claws, an R2-D2 and C-3PO, a Han Solo, a Hammerhead and a Walrus man, a stormtrooper, etc. I used proof of purchases to get a Boba Fett figure in advance of the release of Empire Strikes Back, and picked up a few more Empire level figures here and there—I don't recall that I got very many (if any) Return of the Jedi figures, although my little brothers might well have.
I also had a few of the more expensive things; I had a TIE fighter and an X-wing, for instance, although I recall keenly wanting the Death Star playset and never getting it.
Rather, what I did was mix and mingle these Star Wars figures with my Fisher Price Adventure People, which I had a lot of (probably because they were a lot cheaper) and which were to the same scale. Granted, they weren't really the same genre—Boba Fett getting into a fist-fight with a rally car racer, construction worker, paramedic, or safari guide on the back of a neon green van like Indiana Jones fighting Nazis on the back of a truck is the kind of thing I'm talking about. While a submarine flew around like a space ship trying to grab him with its claw arms, and a rubber octopus wrapped its tentacles around his neck. Meanwhile, a gigantic, over-sized tiger toy with an articulated jaw that was to the wrong scale so that he was roughly the size of a T. rex, as well as some of those 70s style rubber dinosaurs needed to be fought. Boba Fett was usually pretty awesome in these fights, because of course he had a blaster, a gigantic missile on his back, and a smaller missile on his wrist. Plus, he looked a little bit like a space crusader in that armor.
By the early 80s, the Adventure People line had picked up some space stuff, almost certainly as a reaction to the success of Star Wars. At first, it was stuff like pretty realistic astronaut and space shuttles and stuff, but they later picked up pretty gnarly looking robots and aliens and "astroknights." This meant, of course, that it "matched" the Star Wars characters a bit better. That bad-ass "Clawtron" robot was a formidable foe for Boba Fett, and "X-Ray Man" felt like some kind of Guardians of the Galaxy-esque supervillain.
This is a big part of what they mean, I think, when they talk about playing with your toys in the sand. It doesn't mean trying to replicate the Star Wars setting or the Star Wars characters, really—it means playing around with Star Wars elements in a unique environment that is Star Wars-esque... but not really Star Wars.