If sp_ExecuteSql creates a new session, how come I can access a local temp table created (prior to it's execution) outside of the dynamic SQL? If local temp tables are only available to the current session, and sp_ExecuteSql creates a new session to execute the dynamic SQL string passed into it, how can that dynamic SQL query access a temp table created in the session that executes sp_ExecuteSql.

In other words, why does this work:

SELECT 1 AS TestColumn
INTO #TestTempTable

DECLARE @DS NVARCHAR(MAX) = 'SELECT * FROM #TestTempTable'
EXEC sp_EXECUTESQL @DS


Results:



My understanding for the reason why I can't do the opposite (create the temp table in Dynamic SQL and then access it outside the dynamic SQL query in the executing session) is because sp_ExecuteSql executes under a new session.
From an answer by Remus Rusanu:


  Dynamic SQL runs in the same session as the calling code. The issue is
  not session, but scope. Your dynamic SQL creates the temporary tables
  inside the sp_executesql call and thus the created #temp table is only
  visible within that sp_executesql call, as documented in MSDN:


You can validate that you are using the same session in the sp_executesql  call by running:

DECLARE @DS NVARCHAR(MAX) = 'SELECT @@SPID'
EXEC sp_EXECUTESQL @DS


Knowing that sp_executesql runs under a different scope but not a different session, adding information found in the docs on temporary tables: 


  Temporary tables are automatically dropped when they go out of scope,
  unless explicitly dropped by using DROP TABLE:


And that same source on the visibility of temporary tables:


  Local temporary tables are visible only in the current session


These differences in scope vs. session explain why you are able to access the temporary table from the sp_executesql call but not the other way around.