Modular Coding - What types of code portions to convert into library files? Rationale and methods?
It's very subjective what should and shouldn't be put in a library.

I use the simple rules:


If it's an atomic piece of code like a hardware driver, it's a library.
If it's something that could be used in multiple sketches, it's a library.


Maybe things like configuration options could be put in a header file (not a library - a header file in the sketch folder).

You could maybe split portions of your sketch into C++ files or INO files within the sketch (not a library - files in the sketch folder, and using INO files is easier since you don't need header files, the IDE does it all for you) to group things logically together and make it easier to manage (all the LCD code in one file, all the temperature sensor code in another file, that kind of thing).