"Two Tone Chao" are Chao with highlights (eg. normal Chao: the default eggs).
Coloured Chao and Shiny Chao from the Black market are monotone, they are just one colour with no highlights.
When a monotone Chao breeds with a two tone Chao, the baby Chao may come out as one of the following:
Lets say we bought a Green Chao from the black market, and then it mated with a normal Chao,
the possibilities of the baby Chao would be -
b) A Green Chao
c) A Green Two Tone Chao
With Shiny Chao, there are even more results! So... lets say we bought a Shiny Orange Chao from the black market, and then it mated with a normal Chao, the possibilities of the baby Chao would be -
b) An Orange Chao
c) A Shiny Normal Chao
d) A Shiny Orange Chao
e) A Orange Two Tone Chao
f) A Shiny Orange Two Tone Chao
So a "two tone" Chao is basically a Chao that has highlights dependant on its colour.
With these you can get a whole load more of different Chao!
Much more variety than the Dreamcast version.
So since there are 26 monotone Chao from the Black Market,
that gives us a total of 28 different two tone Chao! (including the normal Chao you get at the start, thats a two tone too! And the shiny version of it) I have no pictures yet though.