I do most of my local web development under my userdir (/~tvon), but I don’t like dealing with relative URLs (and some webapps prefer to think they live in your document root). So, I fake it.
Edit /etc/hosts to give localhost some extra aliases:
127.0.0.1 localhost local1 local2 local3 local4 local5
Then tweak apache config to add a few VirtualHosts (in this case in my home dir /Users/tvon):
<VirtualHost *>
ServerName local1
DocumentRoot /Users/tvon/Sites/local1
</VirtualHost>
<VirtualHost *>
ServerName local2
DocumentRoot /Users/tvon/Sites/local2
</VirtualHost>
<VirtualHost *>
ServerName local3
DocumentRoot /Users/tvon/Sites/local3
</VirtualHost>
<VirtualHost *>
ServerName local4
DocumentRoot /Users/tvon/Sites/local4
</VirtualHost>
Now when I want to work on a site, say example.com (assuming it lives in the example.com directory under /Users/tvon/Sites) I symlink it to an available local alias, e.g. ln -s example.com local1 and I can access it as a root site at http://local1/.
Not very fancy, but it makes my life a little easier.