I'm not a theologian by any means, but here is my personal take on soul sleep. The question of soul sleep arose because of the belief in the resurrection of the dead, which seems glossed over in many churches today, despite its importance in the Early Church. Most people believe you die and go straight to Heaven as is or purgatory and then Heaven, assuming you're a Christian. "The resurrection of the flesh/body" is one of the tenets of the Apostle's Creed, so it shouldn't be ignored.
It never made any sense to me that you'd go to Heaven (or purgatory and then Heaven) only to come back at some point for the resurrection, only to return to Heaven. What would be the point then of the resurrection? Furthermore, under that scenario there would be two judgements, one at your death and one on the Day of Judgement. So this is the dilemma Luther struggled with. Let us consider the words of the Early Church Father Justin Maryr, "The resurrection is a resurrection of the flesh which died. For the spirit dies not; the soul is in the body, and without a soul it cannot live. The body, when the soul forsakes it, is not. For the body is the house of the soul; and the soul the house of the spirit."
After contemplating and praying about this for some time I realized that science now tells us that time is an illusion, it only exists relative to something in our limited, human minds. With that knowledge, the image becomes clear. Soul sleep only exists for our understanding as living souls, but God is outside of space and time. As C.S. Lewis states, "Almost certainly God is not in Time. His life does not consist of moments following one another. If a million people are praying to Him at ten-thirty tonight, He need not listen to them all in that one little snippet which we call ten-thirty. Ten-thirty…is always the Present for Him." He goes on, "He knows your tomorrow's actions in just the same way -- because He is already in tomorrow and can simply watch you. In a sense, He does not know your action till you have done it: but then the moment at which you have done it is already "Now" for Him."
So the missing gap in time the dead would seem to experience only exists for us, soul sleep would be our understanding given our perception of time. To God and the dead this doesn't exist. I think this is the meaning of 2 Peter 3:8, "But do not overlook this one fact, beloved, that with the Lord one day is as a thousand years, and a thousand years as one day." As well as Psalm 90:4, "For a thousand years in your sight are but as yesterday when it is past, or as a watch in the night."
In summary, I believe soul sleep might appear to exist to the living given our subjectivity, but in reality the resurrection is happening. I don't think the scientific thinking was there in Luther's time to allow him to fully explain this. So the path would be physical death, then one physical resurrection, then one judgment, then your enteral home.