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In some web applications, the web root (where the web server looks for your website files), is actually a folder inside another folder full of supporting files.

If this case applies to you, you can set your Local Path and Web Root to different folders to accomplish this. However, by default, VirtualHostX assumes your Web Root is the same as your Local Path. This should be correct for most situations. Setting them differently is usually just for advanced cases.

Here's a more detailed explanation on the difference beween the two settings.