[Kagura]

On the subject to declaring variables to their most confining scope next should be noted:

local a
for i=1, 5 do 
    a = i
end

-- Compiles into

main <test.lua:0,0> (7 instructions, 28 bytes at 0x80049128)
0+ params, 5 slots, 0 upvalues, 5 locals, 2 constants, 0 functions
        1       [3]     LOADK           1 -1    ; 1
        2       [3]     LOADK           2 -2    ; 5
        3       [3]     LOADK           3 -1    ; 1
        4       [3]     FORPREP         1 1     ; to 6
        5       [4]     MOVE            0 4
        6       [3]     FORLOOP         1 -2    ; to 5
        7       [5]     RETURN          0 1
]]

for i=1, 5 do 
    local a
    a = i
end

-- Compiles into

main <test.lua:0,0> (8 instructions, 32 bytes at 0x80049128)
0+ params, 5 slots, 0 upvalues, 5 locals, 2 constants, 0 functions
        1       [2]     LOADK           0 -1    ; 1
        2       [2]     LOADK           1 -2    ; 5
        3       [2]     LOADK           2 -1    ; 1
        4       [2]     FORPREP         0 2     ; to 7
        5       [3]     LOADNIL         4 4
        6       [4]     MOVE            4 3
        7       [2]     FORLOOP         0 -3    ; to 5
        8       [5]     RETURN          0 1
]]

and

for i=1, 5 do 
    local a = i
end

-- Compiles into

main <test.lua:0,0> (7 instructions, 28 bytes at 0x80049128)
0+ params, 5 slots, 0 upvalues, 5 locals, 2 constants, 0 functions
        1       [2]     LOADK           0 -1    ; 1
        2       [2]     LOADK           1 -2    ; 5
        3       [2]     LOADK           2 -1    ; 1
        4       [2]     FORPREP         0 1     ; to 6
        5       [3]     MOVE            4 3
        6       [2]     FORLOOP         0 -2    ; to 5
        7       [4]     RETURN          0 1

As you can guess, the second is a bit slower, but it should also be noted that the gain from this is only going to be noticable for large amount of variable declarations.

While doing a large amount of variable declarations, next should also be noted (I'll leave the compiled versions out since I don't want to pollute the thread):

function UnitAura(unitId, index)
end
 
local startTime, endTime
startTime = os.clock()
for j = 1, 1000000 do
    local name, rank, icon, count, dispelType, duration, expires, caster, isStealable, shouldConsolidate, spellID, canApplyAura, isBossDebuff, value1, value2, value3
    for i = 1, 40 do
        name, rank, icon, count, dispelType, duration, expires, caster, isStealable, shouldConsolidate, spellID, canApplyAura, isBossDebuff, value1, value2, value3 = UnitAura("player", i)
    end
end
endTime = os.clock()
 
print(endTime-startTime)
 
startTime = os.clock()
for j = 1, 1000000 do
    for i = 1, 40 do
        local name, rank, icon, count, dispelType, duration, expires, caster, isStealable, shouldConsolidate, spellID, canApplyAura, isBossDebuff, value1, value2, value3 = UnitAura("player", i)
    end
end
endTime = os.clock()
 
print(endTime-startTime)
 
startTime = os.clock()
for j = 1, 1000000 do
    for i = 1, 40 do
        local name, rank, icon, count, dispelType, duration, expires, caster, isStealable, shouldConsolidate, spellID, canApplyAura, isBossDebuff, value1, value2, value3
        name, rank, icon, count, dispelType, duration, expires, caster, isStealable, shouldConsolidate, spellID, canApplyAura, isBossDebuff, value1, value2, value3 = UnitAura("player", i)
    end
end
endTime = os.clock()
 
print(endTime-startTime)
 
--- Results
$ lua test.lua
5.859
2.562
6.375

If you really want to optimize your addon, you need to look at compiled code and understand how function calls/lua stack works.