Questions about temporary tables

[Ludvig Boman]

I would like to know what happens when you create a temporary table if you don't specify Engine type. Is it stored on disk or in memory? What do you recommend for the best performance, should I use Engine=InnoDB or Engine=Memory for temporary tables? Or should I not specify engine at all? Is there any way to let MySQL choose if the temporary table should be stored on disk or in memory based on what it thinks is the best for performance?

Also, I have read somewhere that the Memory storage engine is "non-transactional"? What does that mean? Will there be a problem if I use temporary tables with the Memory engine in a transaction?