public_html folders

hello everybody,

i'm using knppix 3.7 and want to use it as a server, but from my understanding its not smart to run as root, so what i was thinking in making public_html dir's in the user acounts, and according to my start-up page when i go to my localhost, its supported...

but i dont understand it says:
User directories are enabled, and user documents will be looked for in the public_html directory of the users' homes. These dirs should be under /home, and users will not be able to symlink to files they don't own.

now how does it work? just make the map public_html, in the /home/ dir? or in the /home/username/ dir?
and if its the first one, how does it know witch public_html is owned by who?,

please help, i'm desperate in getting this to work

edit) ife got this working but now its this url:
http://localhost/~user/phpinfo.php

and i want just the type in localhost and then get the contents of the public_html of the current user, how do i do that???