Quick A: When it is assigned.

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When is an rvalue evaluated?

s2 binds to the expression s1 + s1, but is this evaluated at the time s2 is assigned

Yes.

And also would s2 hold memory for a temporary string?

Precisely, s2 is bound to a temporary std::string.

s1 + s1 will produce a temporary std::string, which will be bound to the reference s2 (and its lifetime is extended to the lifetime of the reference). Then s2 += "Test";, performs operator+=() on  s2, i.e. the temporary std::string.