Why do toys in Toy Story absolutely want to avoid interacting with humans? Why not interacting with them like they interact with the dog for example?
The toys in Toy Story are portrayed as they would be in real life. In real life, toys don't move when a human is around. Who knows what they do when we don't look.. They might be doing their own thing (This might explain how I lost some of my toys when I was young)
Because it's a story that wants us to imagine that toys secretly come to life when nobody's looking. In other words, they want to tell the story about what what life might be like if that really happened, and maybe imagine our toys doing the same.
They couldn't do this in a world where toys moved freely about in front of the kids, it would take away from the suspension of disbelief.
I don't think a reason in-universe is ever given (it's just implied there are "rules" by Woody in the first film)
The reason that the toys in toy story don't want to interact with the human species is because they don't exactly know how the human will react. Children are normally rough with toys anyway and if a child saw one move or talk, they would probably get scared because it's out of the norm. Also, with an adult it would probably worse. Adults are more experienced in life and would know when danger approaches, plus it might be their child's toy and they could get scared for the child's safety. Another reason for the toys not wanting humans to see them move might have been so they didn't get split up because in toy story, they are all friends (well, most of the time!)
If an adult human sees a toy somewhere other than where it should be, the adult will probably put the toy back. Which means the toy will have to go through all that work again. If a child sees the toy and picks it up, who knows where the toy will end up. As a final thought, suppose you looked down and saw a toy like Woody sneaking across the floor. How would you react -- in real life?