“Forgiving” means that you personally let go of the hurt and anger you’re carrying around inside about this person. Maybe pray for them.
It does NOT mean that what they did to you was OK. It’s fine to say to them, “What you just said is not true, it is hurtful, and it is unacceptable behavior.” If their behavior is something reportable (to the police, to your boss in the workplace, etc.) it’s fine to report it and you should report it.
It does NOT mean that you should put yourself in a position to have them do it again, unless there’s no way you can get out of the situation. An example of a situation you can’t get out of would be if the person is, for example, your elderly parent, and they are old and sick and you are taking care of them, and they hurt you by criticizing you and being angry with you. Obviously you still have to keep taking care of the person because they are dependent on you.
But in most cases, where it’s just somebody outside your family, you can limit your contacts with them. I’ve cut a number of former friends totally off, blocked them on the Internet, etc. because of toxic behavior.
I still forgive them for whatever they did - and in some cases I even recognize that it was a situation with no “bad guy”, just a friendship that no longer worked because our lives or values went in different directions, causing a hurtful situation to develop.
In short: “Forgiveness” means you let go of internal bad feelings, anger, hate etc. towards the person.
It does not mean you have to be a doormat or approve of/ allow toxic behavior.
Edited to add, You don’t always have to call them up and say “I forgive you” either. You can do it in your heart, especially in cases where reaching out to the person is just going to set off another round of toxic drama.