[Simon]

Yes, with that line in your htaccess, you're telling your server to parse html pages looking for executable instructions. The only caveat is that it takes a server a little longer to process each page that way. But not really any longer than if you were using php extensions.

If you have any directories where you don't use PHP on the pages, you can add an htaccess file to those directories to stop the html pages from being parsed to look for php code. Otherwise the one htaccess at your root level will control all directories