It just means that all your code is spread out and must be navigated around as though it were a badly-organised web site. The important point is that you must break it down to the level where it promotes understanding. If you don't, nobody else will without great difficulties. Many coding standards have it that functions must be kept short by breaking them into many functions if they begin to grow beyond a certain number of lines. This is as easy as it gets.
Auxiliary variables are ones whose value is derived from other readily-available values.
These are always a tricky subject. Sometimes these uses will be in conflict. If you are expecting to have access to a decent optimising compiler, I recommend favouring readability.