WPMU posts return 404 not found

I’ve installed WordPress MU on a fresh Apache httpd and I go to try it out. I start by clicking on the ‘hello world’ post that comes as default and the page returns a 404 “not found” message. What is happening? This keeps happening to me all the time so I might as well share it here for others.

This can be fixed this by setting “AllowOverride to All” in the httpd.conf file, in the relevant Directory directive section where MU is installed.