From the MS docs:
http://msdn.microsoft.com/en-us/library/ms177399(SQL.90).aspx
Temporary Tables
Temporary tables are similar to permanent tables, except temporary tables are stored in tempdb and are deleted automatically when they are no longer used.
There are two types of temporary tables: local and global. They differ from each other in their names, their visibility, and their availability. Local temporary tables have a single number sign (#) as the first character of their names; they are visible only to the current connection for the user, and they are deleted when the user disconnects from the instance of SQL Server.
Global temporary tables have two number signs (##) as the first characters of their names; they are visible to any user after they are created, and they are deleted when all users referencing the table disconnect from the instance of SQL Server.
For example, if you create the table employees, the table can be used by any person who has the security permissions in the database to use it, until the table is deleted. If a database session creates the local temporary table #employees, only the session can work with the table, and it is deleted when the session disconnects. If you create the global temporary table ##employees, any user in the database can work with this table. If no other user works with this table after you create it, the table is deleted when you disconnect. If another user works with the table after you create it, SQL Server deletes it after you disconnect and after all other sessions are no longer actively using it.
Additionally from Curt who corrected the error of my ways and just in case you miss the citation in the comment:
http://msdn.microsoft.com/en-us/library/ms191132.aspx
If you create a local temporary
table inside a stored procedure, the
temporary table exists only for the
purposes of the stored procedure; it
disappears when you exit the stored
procedure.
If you execute a stored procedure
that calls another stored procedure,
the called stored procedure can
access all objects created by the
first stored procedure, including
temporary tables.