Android Scripting Environment, which is recently renamed to SL4A (Scripting Layer for Android), is what makes this project possible. The app called PhpForAndroid.apk installs the PHP binary, their Android PHP class (ported from Python) and a few PHP samples.

It won't need a web server or anything as it uses PHP CLI. You need a custom ASE build to run it, and it will run PHP 5.3. Minimum requirement to run PFA is Android 1.5, or you can just fetch the emulator.

APK and source code both available at the PFA website. Check out the interview from PHPClasses with lead developer of the PFA project.