Normally PHP applications run thru Apache's mod_php4 module which means that
they are executing as the "apache" user. This is the default behavior because
mod_php4 is the fastest way to run a PHP script.
The drawback is that it has important security implications: the scripts
run as the same user that Apache runs as. This means that all files that the
PHP applications accesses must be readable (and sometimes even writable) by the
apache user. Also, the .php files themselves need to be readable by apache.
Since all files on your web site are owned by you in order to allow apache to access
them you need to give read permissions for those files to the rest of the world.
In a shared hosting environment this could be dangerous (other users
on the same server may be able to access your data including the source code of your
PHP programs). If you're using GPL'd third-party applications you don't have
to worry about other people browsing the source code since the code is publicly available
anyway. But if you're developing your own PHP applications this may become an issue.