I live in Calgary, and quite frequently travel to/from Europe on Air Canada (or StarAlliance-affiliated airlines), so have done exactly this transfer-from-international-to-domestic-Air-Canada-in-Toronto operation many times.
Your mother's baggage will be tagged in Warszawa through to Winnipeg, however as you correctly understand, she will need to collect it in Toronto and re-deposit it. The purpose of this is essentially so that she will have the baggage physically with her when she passes through Canada Customs, which will happen during her transfer in Toronto (so if there are any questions, if they want to inspect the baggage, etc. then she can do that).
So:
In Warszawa, her baggage will be tagged through to Winnipeg (via Toronto), as above.
When she lands in Toronto, she will first be directed to clear Canada Immigration (she will naturally have no choice in this matter - at this point all the signs will indicate "Arrivals" / "Baggage Carousels" / "Canada Connections" / "International and US Connections" and will all point to the same place).
After passing through immigration, she will come down the escalators to the baggage carousel area (see the area marked "#1" on my attached map) and will have to pick up her luggage from the appropriate carousel for her LOT flight from Warszawa.
She will then continue through to Canada Customs (again, all signs will indicate "Customs" and (possibly?) "Connections"), with her baggage.
Immediately AFTER passing through customs, she will make an immediate left turn, following signs to "Canada Connections". At this point, there is a separate corridor for said connections, with a dedicated baggage drop-off (see the area marked "#2" on my attached map).
She will drop off her baggage (still tagged through to Winnipeg) on this conveyor belt (on her left), which should be also checked by local staff to verify it is correctly tagged (although this has sometimes not occurred).
She will then exit through the doors on her right (Air Canada staff will usually be on hand at this point to confirm she has a correct onward boarding pass herself) then go up the escalator to the departure level, again following signs for "Canada Connections" (see the area marked "#3").
Once at the departure level, she will pass back through security to the post-clearance domestic departure lounge, where she can proceed to the gate for her onward flight to Winnipeg.
YYZ Terminal 1 arrivals Level, screenshot from interactive maps at maps.torontopearson.com