It might simply be that the dog is bored. This may be the case with puppies and high
energy dogs that need a lot of stimulation. Dogs will play with toilet paper if they aren’t
getting enough attention from their humans. However, I once had a dog that got all the
attention in the world, and he would tear up the toilet paper every chance he got. Boredom had nothing to do with it. That dog just thought toilet paper was the most fun toy ever invented. He played for sheer enjoyment. 

I haven’t found a good explanation for why some dogs become toilet paper terrors. Maybe they like to decorate? Cats have been known to play the same games – especially batting at the roll to unspool it. (That somehow seems easier to understand than the doggie version.) And bigger dogs will play a variation with paper towels. Other than being a mess, an embarrassment, and putting a dent in your household paper product budget, what’s the big deal? Well, not too much, as long as your dog isn’t eating the paper. This is where the conversation turns a bit serious, because this stuff is not too digestible. If your dog is actually swallowing paper and not just playing with it, then it’s time to take precautions. Keep the paper towels and toilet paper away from your dog, because eating too much of it can cause intestinal problems that could be so severe as to require surgery.

Could It Mean More for Your Dog?

The technical term for compulsively eating something that isn’t digestible is “pica.”
Although dogs usually outgrow this type of behavior by the age of two, if your adult dog
is still doing it, it could be cause for concern. Sometimes adult dogs will eat non-food
items because of stress, diet, intestinal cancer or even diabetes. If your dog is still regularly eating things they shouldn’t after the age of two, you may want to consult your vet. Odds are though, you just need to keep your dog occupied so that he isn’t looking for something to do, and keep the toilet paper out of reach.