Toy airplanes do use oil, it's just mixed in with the fuel. Many water-cooled cars do have an oil cooler, but it's not the primary means of cooling the engine.

Toy airplanes do use oil, it's just mixed in with the fuel. Many water-cooled cars do have an oil cooler, but it's not the primary means of cooling the engine. In those cases it's more about keeping the oil at a constant temperature. Oil cooled cars have sump capacities 2x water cooled cars.