(This message board is truly wonderful!)

My husband and I are flying into Madrid and then have three days to explore Spain before departing for Portugal. My thought right now is to head to Toledo from Madrid and then off to Sevilla before going to Portugal.
Can we just take a bus from city to city?
Are we missing out not visiting other cities?

(My 2 cents) Your proposed itinerary might leave you tired and feeling as though you haven't seen anything. I would save Seville for another time and confine your 3 days to Madrid and Toledo. There's a lot to see and do in those two places.

"...three days to explore Spain ..." That's what you wrote. Is one of those days your day of arrival on a TransAtlantic flight? If it is, you can scratch about a half day from your ambitious plan. What you can do also depends largely on the day of the week that you arrive (i.e., museums may be closed on Mondays). You may be able to squeeze in a half day tour to Toledo; but IMHO, Sevilla is out of the question. Enjoy Madrid!

From Toledo I think you'll need to return to Madrid to get to Sevilla. The train to Toledo is little more than an extended suburban line. For buses you'll have to go back to Madrid.

>Are we missing out not visiting other >cities?

Yes, but you don't have time. Just visiting the 3 places you mention in 3 days means you'll simply skim across the surface. I'd take Eddie's advice and stick to Madrid and Toledo.