There's a delicate balance between useless instance variables and extracting well-named variables for readability.

LongController.php

<?php

class ModuleController extends Controller
{
    public function getIconAction($moduleId)
    {
        $moduleFinder = $this->get('module_finder');

        $module = $moduleFinder->getModule($moduleId);
        if (!$module) {
            return new Response('Could not find given moduleId', 404);
        }

        $logoPath = $module->getModuleFilePath('Resources/images/logo.png');

        // Return the module's logo, if one exists
        if (file_exists($logoPath)) {
            $image = file_get_contents($logoPath);
        }
        // Fallback to default logo
        else {
            $image = file_get_contents(__DIR__ . '/../Resources/images/dashlogo-small.png');
        }

        return new Response($image, 200, ['Content-Type' => 'image/png']);
    }
}

ShorterController.php

<?php

class ModuleController extends Controller
{
    public function getIconAction($moduleId)
    {
        $module = $this->get('module_finder')->getModule($moduleId);
        if (!$module) {
            return new Response('Could not find given Module for given moduleId', 404);
        }

        // Return the module's logo, if one exists
        // else fallback default
        $logoPath = $module->getModuleFilePath('Resources/images/logo.png');
        if (!file_exists($logoPath)) {
            $logoPath = __DIR__ . '/../Resources/images/dashlogo-small.png';
        }

        return new Response(file_get_contents($logoPath), 200, ['Content-Type' => 'image/png']);
    }
}

This is a good refactoring example!

When I'm writing methods, I like to start by declaring all the things I'll probably end up using. This gives me a nice block of variables at the top of the method that primes me for what to expect in the code that follows. It also has the benefit with phpstorm of letting me click on the variable names and see how they're used in the code below.

I tend to group the validation rules right next to the variable assignment, if possible, which is why you see the if (!$module) right under $module.

I totally agree with you about the redundant $image variable, that was a result of writing code at 5pm. :)

I like your refactored method much better, I just wanted to give you an overview of how I write/read code since I enjoyed seeing what your mental process was.