Why use instance variables to "connect" controllers with views?

In a sense, you could say that it is breaking encapsulation. I have found that if you are not careful, it is easy to get your business/presentation logic mixed together in Rails. It usually starts when I am writing a view template, and discover that I need some value which I didn't pass from the controller. So I go back, and tweak the controller to suit what I need in the view. After one tweak, and another, and another, you look at the controller method, and it is setting all kinds of instance variables which don't make sense unless you look at the view to see what they are for. So you end up in a situation where you need to look at both controller and view to understand either, rather than being able to take one or the other in isolation.

I think that using instance variables (together with the Binding trick) is simply a way to pass whatever values you need from controller to view, without having to declare parameters in advance (as you would when defining a method). No declarations means less code to write, and less to change when you want to refactor and reorganize things.