I have a slightly different take than others on this: I think the main contributor is the fact Toronto's financial district is extremely dense compared to most if not all European cities, and serviced by a highly trafficked subway line that loops around it. Many of the large office skyscrapers are built right on top of the subway, and so they naturally have a public underground connection, and usually it's a mini-mall with a food court and amenities for the office workers. Because of downtown's density these kind of just merged together into the larger PATH network.

The weather is of course also a factor. It's just incredibly convenient in the winter, or even in the summer when it's muggy out, for office workers. You just hop onto the elevator during your lunch or coffee break, wearing your office clothes, no need to throw on a jacket or bring an umbrella or anything. It's just an extension of your office building basically.

Toronto ALSO has healthy commercial streets all over the place that you access from street level and that DON'T connect to these tunnels. It's a very large city. The PATH tunnels are just one district.