How can SQL Delete using a sub query

The subquery you have in your code is called a derived table. It's not a base table but a table that "lives" during the time that the query runs. Like views (which are also called viewed tables) - and in recent versions CTEs which is another, 4th way to "define" a table inside a query - they are similar to a table in many ways. You can select from them, you can use them in from or to join them to other tables (base or not!).

In some DBMS, (not all DBMS have implemented this the same way) these tables/views are updatable. And "updatable" means that we can also update, insert into or delete from them.

There are restrictions though and this is expected. Imagine if the subquery was a join of 2 (or 17 tables). What would delete mean then? (from which tables should rows be deleted?) Updatable views is a very complicated matter. There's a recent (2012) book, entirely on this subject, written by Chris Date, well known expert in relational theory: View Updating and Relational Theory.

When the derived table (or view) is a very simple query, like it has only one base table (possibly restricted by a WHERE) and no GROUP BY, then every row of the derived table corresponds to one row in the underlying base table, so it is easy^* to update, insert or delete from this.

When the code inside the subquery is more complex, it depends on whether the rows of the derived table/view can be traced/resolved to rows from one of the underlying base tables.

For SQL Server, you can read more in the Updatable Views paragraph in MSDN: CREATE VIEW.

Updatable Views

You can modify the data of an underlying base table through a view, as long as the following conditions are true:

• Any modifications, including UPDATE, INSERT, and DELETE statements, must reference columns from only one base table.

• The columns being modified in the view must directly reference the underlying data in the table columns. The columns cannot be derived in any other way, such as through the following:

• An aggregate function: AVG, COUNT, SUM, MIN, MAX, GROUPING, STDEV, STDEVP, VAR, and VARP.

• A computation. The column cannot be computed from an expression that uses other columns. Columns that are formed by using the set operators UNION, UNION ALL, CROSSJOIN, EXCEPT, and INTERSECT amount to a computation and are also not updatable.

• The columns being modified are not affected by GROUP BY, HAVING, or DISTINCT clauses.

• TOP is not used anywhere in the select_statement of the view together with the WITH CHECK OPTION clause.

The previous restrictions apply to any subqueries in the FROM clause of the view, just as they apply to the view itself. Generally, the Database Engine must be able to unambiguously trace modifications from the view definition to one base table.

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^{Actually delete is easier, less complex than update. SQL Server only needs the primary keys or some other way to identify which rows of the base table are to be deleted. For update, there is an additional (rather obvious) restriction that we can't update a computed column. You can try to modify your query to do an update. Updating the CreatedDateTime will probably work just fine but trying to update the computed RowNumber column will raise an error. And insert is even more complex, as we'd have to provide values for all the columns of the base table that don't have a DEFAULT constraint.}

It's easy to see when you look at the query plan. In your case, the plan just contains an additional Segment and Sequence Project operator to handle the row number. This type of operation only works when SQL Server actually can resolve the underlying table.

Deleting from subqueries and CTEs is fully supported and very efficient, particularly for removing duplicates. I also seem to recall using it on older versions of SQL Server.

More in an old blog post of mine.