why do I need to set the user and group to the same owner of the file that is being displayed?

I downloaded and installed Apache 2.2.4 from source.
Out of the box, no problem with the standard httpd.conf. I can display the
"It works!" html page that resides in the htdocs directory when I enter the
IP address (of the machine with apache installed) in the browser of a PC on
the same local network.

However the problems occur when I try adding the most basic of virtual hosts
(see just below). This produces an Error 403 permission denied on any html
file in the below directory.

NameVirtualHost *:80
<VirtualHost *:80>
ServerName www.domain.co.uk
DocumentRoot /home/lumsden/websites/domain.co.uk/www/html
</VirtualHost>

The owner/group of the directory
/home/lumsden/websites/domain.co.uk/www/html is phillatio but I can't see
that actually matters since the permissions are drwxr-xr-x.

I then looked in the httpd.conf file, both the user and group were earlier
set by me to apache which I then set the home directory as
/home/lumsden/websites. However I changed both user and group to phillatio
within the httpd.conf file and suddenly the pages under the virtual host are
displayed.

So my question is why do I need to set the user and group to the same owner
of the file that is being displayed?

Cheers

Phil