On most Apache servers, PHP runs as an Apache module. This is the default method of installation. Many hosts have this setup because it is default and potentially they do not realize that it is also possible to configure PHP as a CGI. Running PHP as a CGI can be more secure whilst also avoiding file and directory ownership issues.
PHPSuExec provides the facility to have all scripts running the relevant user account instead of under the Web Servers account. This facility allows the server Administrators to isolate and manage malicious or runaway script usage very quickly, avoiding unwanted or un-authorised scripts from running for a lengthy period of time.
What does phpSuExec Do?
With non- phpSuExec configurations, PHP runs as an Apache Module it executes as the user/group of the webserver which is usually "nobody", "httpd" or "apache". Under this mode, files or directories that you require your php scripts to be able to write to need 777 permissions (read/write/execute at user/group/world level). This is not very secure because it allows the webserver to write to the file, it also allows anyone else to read or write to the file.
Under phpSuExec configurations, PHP running as a CGI with "suexec" enabled (su = switch user, allowing one user to "switch" to another if authorised) - Your php scripts now execute under your own user/group level. Files or directories that you require your php scripts to be able to write to no longer need to have 777 permissions. In fact, 777 permissions are no longer allowed, having 777 permissions on your scripts or the directories they reside in will not run and will instead cause a "500 internal server error" when attempting to execute them, this is done to protect you from someone abusing your scripts. Your scripts and directories can now, only have a maximum of 755 permissions (read/write/execute by you, read/execute by everyone else).