When does sp_executesql refresh the query plan?
The line from MSDN is talking about using EXEC(), like this:

SET @sql = 'SELECT foo FROM dbo.bar WHERE x = ''' + @x + ''';';
EXEC(@sql);


In my testing, modern versions of SQL Server are still able to reuse a plan like this, but there may be other variables (such as version, or for example if you add conditional WHERE clauses based on the presence of certain parameters - in which case that will generate a different plan).

If you use sp_executesql then the parameter values can still cause parameter sniffing issues (just like with normal SQL), but this has nothing to do with whether SQL Server can re-use the plan. This plan will get used over and over again, just as if you hadn't used sp_executesql at all, unless variables that would cause a direct query to get recompiled, in which case this one will get recompiled too (essentially, SQL Server doesn't store anything with the plan that says "this was executed from sp_executesql, but this one wasn't):

SET @sql = N'SELECT foo FROM dbo.bar WHERE x = @x;';
EXEC sys.sp_executesql @sql, N'@x varchar(32)', @x;


As a bonus, this has built-in protection against dynamic SQL, and avoids you having to worry about doubling up single quotes due to string delimiters. I blogged about some of this here and please read up on SQL injection here and here.

If you are having issues with plan re-use and/or parameter sniffing, some things you should look into are OPTION (RECOMPILE), OPTIMIZE FOR, optimize for ad hoc workloads and simple/forced parameterization. I addressed a few similar questions in response to a recent webcast here, it may be worth a skim:


Follow-up on Summer Performance Palooza 2013


The gist is: don't be afraid to use sp_executesql, but only use it when you need it, and only spend energy over-optimizing it when you have an actual performance issue. The example above is a terrible one because there's no reason to use dynamic SQL here - I've written this answer assuming you have a legitimate use case.