1) The primary if not only reason do break down a complex query into multiple steps with interim storage (using TEMPORARY TABLES, NOT TABLE VARIABLES as discussed in number 2 below) is to ensure optimal performance of said query. You absolutely should NOT break down a single query into multiple steps just for 'human readability'.

2) Table variables should almost NEVER be used. The two exceptions I can think of are if you have a VERY high call situation where recompilations related to temp table activity are causing performance degredation or if you need interim data to remain in place for auditing purposes after a transaction rollback. Others mention performance problems from table variables with lots of rows. Well, I can show you an example that gives bad performance with just a SINGLE row in a table variable.