Recommended SQL Server transaction logs settings for ephemeral databases?
Simple recovery model doesn't mean that the transaction log isn't used.
It just means that SQL Server can empty the log (aka &quot;truncate&quot; the log), instead of having to do it yourself scheduling regular transaction log backups. I.e., the log need space for the largest/earliest open transaction, since the log cannot be truncated past the oldest transaction - regardless recovery model.
Simple does mean, however, that some operations can be performed in minimally logged form. Such include create/alter/drop index, SELECT INTO, bulk loading of data and if the stars are properly aligned also INSERT ... SELECT.
So, if simple doesn't cut it for you regarding space usage, then you'd have to look into how the operations are done - i.e., educate the developers about minimal logging as I mention above.
As for speed, minimally logging will help there as well, since you have less I/O. Larger transactions (within some reason) means less synchronous I/O to the LDF file. From a pure config aspect, I guess some RAM disk option for the ldf file could help - but that might not be doable if you need large ldf files.