It's not clear to me why they don't just run development on their local machines. I'm not familiar with PHP, though. I'm all for having a build/test vm, though.
Any moderately complex app has a few moving parts. At least you have the web server and the DB. The DB has settings like the default character set, table types etc. These have to be kept in sync across all instances, dev, stage, and prod. The web server also has modules and a conf file with mod_rewrite rules which change and should be kept in sync. Sometimes you update a library or a version of ruby. Add a noSQL server, message bus, file storage, email, etc and you can see how it becomes a serious issue. And the problem grows exponentially the more developers there are each with one or more dev instances which have to get the latest changes and be kept up to date.
These things all have to be dealt with and should not be thrown over the wall and "let the sysadmin deal with it." That's where the value of the OS and infrastructure is a set of code and config files which are kept in source control next to our code and versioned with it is so valuable. Run "vagrant up" and a fresh consistant build every time. Then develop in php, python, perl, ruby or brainfuck if you want.
I've had a setup like this going for years. I'm a big fan.
It's unlikely that your server is the same os as your desktop. So you waste time setting up versions of libraries and services for e.g. windows that don't always work quite the same as in production. Plus you can also take advantage of snapshots to mess around with your local vm, confident that you can always roll back to a known version. You can do simplified load testing without actually crashing your whole machine.
It also means your devs can use whatever OS they want - the hard work of setting up a dev environment is already done.
I good PHP environment that models the server is very hard to get going locally. At least on OS X. The only way I could get a good environment for Nginx+MySQL+PHP was to locally run a debian VM in VirtualBox.
Now this doesn't even take into account things like memcached that require a lot more customization.
Developers aren't server administrators (usually). It's not the best use of their time.
I wish I had thought of this when we ran into issues with Windows people and Ruby. Too much of their time was spent fussing with stuff and crying about it. :)
It's easier to give a new developer a VM image than have them set up Apache, 2 Apache modules, PHP, 3 PHP extensions, MySQL, memcached, ImageMagick, mplayer, a queueing system, a custom database daemon for statistics, and a Lucene-based search daemon. And all with the same options as production.
