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?

To solve sql server sp_executesql error you can go through the below answer:

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 multiple 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.