Layer files reference geographic data stored on disk. They can reference most data sources supported in ArcCatalog, such as feature classes, CAD datasets, CAD drawing datasets, coverage datasets, shapefile datasets, raster datasets and bands, TIN datasets, and so on. You can think of them as a cartographic view of your geographic data. They are separate files on disk and have a .lyr extension. Many geoprocessing tools handle layer files. Some tools only accept layer files or layers in memory as input or output. If this is the case with the tool you are using, the display name for the parameter will contain the word "layer", and all other data sources will be filtered out of the parameter's Browse dialog box. For more information on layer files, see the printed book, Modeling Our World.
A layer is an in-memory file that references data stored on disk. It is the same as any layer created when you add data to the display of ArcMap. The "Make Layer" tools—for example, Make Raster Layer—create a layer from the input data. This layer is temporarily stored in memory; it is not saved on disk and only remains available within the current session. If the session is closed, the layer is deleted. Layers created in ArcCatalog cannot be used in ArcMap, and vice versa. ArcCatalog does not display created layers, but they can be used as inputs to other geoprocessing tools in the session in which you are working. One of the main reasons for making and using layers is performing attribute or locational selections. By making a layer in memory first, you can perform selections on the layer without affecting the original data source. If desired, you can save a layer to a layer file (.lyr) using the Save to Layer File tool.
table view are the table equivalent of a layer. They are tables stored in memory and are the same as the table view created when a table is added to ArcMap. The Make Table View tool creates a table in memory. ArcCatalog does not display these tables, but they can be used as inputs to other geoprocessing tools in the session in which you are working. Once you exit the application, the tables in memory are removed. Type "table" in the Search tab of the ArcToolbox window to locate tools that accept table views as input or output.