Differences between SQL Server temporary tables and table variables

Temporary tables are created in tempdb. The name "temporary" is slightly misleading, for even though the tables are instantiated in tempdb, they are backed by physical disk and are even logged into the transaction log. They act like regular tables in that you can query their data via SELECT queries and modify their data via UPDATE, INSERT, and DELETE statements. If created inside a stored procedure they are destroyed upon completion of the stored procedure. Furthermore, the scope of any particular temporary table is the session in which it is created; meaning it is only visible to the current user. Multiple users could create a temp table named #TableX and any queries run simultaneously would not affect one another - they would remain autonomous transactions and the tables would remain autonomous objects. You may notice that my sample temporary table name started with a "#" sign. This is the identifier for SQL Server that it is dealing with a temporary table.

Table Variables

The syntax for creating table variables is quite similar to creating either regular or temporary tables. The only differences involve a naming convention unique to variables in general, and the need to declare the table variable as you would any other local variable in Transact SQL

table variables have certain clear limitations. Table variables can not have Non-Clustered Indexes
You can not create constraints in table variables
You can not create default values on table variable columns
Statistics can not be created against table variables

Similarities with temporary tables include:

Instantiated in tempdb
Clustered indexes can be created on table variables and temporary tables
Both are logged in the transaction log
Just as with temp and regular tables, users can perform all Data Modification Language (DML) queries against a table variable: SELECT, INSERT, UPDATE, and DELETE.