Modularization techniques like macros, includes, subroutines, and function modules are used in ABAP to avoid repetitive coding and provide structure, readability, and code reusability. These techniques allow code to be organized, reused, and maintained more easily. Parameters can be passed to subroutines by reference, value, or value and result, and actual parameters in the main program are linked to formal parameters in the subroutine. Typed and generic formal parameters specify how the data types are handled.