I think what ur meaning is Cel Shading?

http://en.wikipedia.org/wiki/Cel_shading

Those techniques are pretty well documented, nothing very special. See any of the Dragon Ball games, Ni no Kuni, or countless others. I think Jet Grind Radio (Jet Set Radio in Japan) was the first title to use it, or at least was the first widely-known game to do so.

does anyone know of any good sources of the theory behind how to do this?

Well, first of all, you need to know how to use OpenGL or DirectX (or some other graphics API ) that support shaders. After that you should look into GLSL or HLSL shading language (which is based on C) And then you can search internet on how to achieve "Toon shader" you should find a lot of resources.

Good luck with achieving this awesome effect! :)

There are a number of ways to do it:

You can render objects slightly larger than they are, in black, with depth test disabled, then render the object normally; this generates an outline. I believe this approach is probably outdated through.

You can render the scene as per usual, and then use edge detection to fill in the outline. You can use the color buffer, depth-buffer, or both as the data source. You could also just render a different buffer solely for edge detection, wherein you rasterize each distinct object with a value that's strongly differentiated from the others.

For the animation-style shading, you basically just use the normal lighting models, except that you transition between discreet steps in a color palette rather than smoothly. You can either discretize a single base color it in a shader directly, you can use the dot product to index a 1-dimensional array, or use the normal of each pixel to index into a 2D texture that's a polar-coordinate representation of the discrete transitions.