First, make sure that "Web Sharing" is turned off.
Second, edit the file /etc/httpd/httpd.conf.
Third, search through that file for lines containing the string "php". You'll find two that are important, and that they commented out by having a '#' character at the beginning of the line. Remove the '#' character. The two lines are:
... # LoadModule php4_module libexec/httpd/libphp4.so ... # AddModule mod_php4.c ...
Fourth, restart Web Sharing.
Fifth, test it by making a file in your ~/Sites directory named phpinfo.php and have it include the following:
<? phpinfo(); ?>
If this script successfully executes it prints a whole range of useful information about the PHP environment. You should keep this script handy.
By default Apple configures the directory "/Library/WebServer/Documents" so it appears on http://localhost. Each user has in their home directory a ~/Sites directory, which you can reach as http://localhost/~username.