David - table variables are stored in memory, if you search in books online under table variables, you will find some help on them. It looks like microsoft would prefer us to use these over temporary tables. See the quote from BOL below:

Use table variables instead of temporary tables, whenever possible. table variables provide the following benefits:

• A table variable behaves like a local variable. It has a well-defined scope, which is the function, stored procedure, or batch in which it is declared.

  Within its scope, a table variable may be used like a regular table. It may be applied anywhere a table or table expression is used in SELECT, INSERT, UPDATE, and DELETE statements. However, table may not be used in the following statements:

  INSERT INTO table_variable EXEC stored_procedure

  SELECT select_list INTO table_variable statements.

  table variables are cleaned up automatically at the end of the function, stored procedure, or batch in which they are defined.

• table variables used in stored procedures result in fewer recompilations of the stored procedures than when temporary tables are used.
• Transactions involving table variables last only for the duration of an update on the table variable. Thus, table variables require less locking and logging resources.