Apache's .htaccess can be a powerful tool for webmasters in managing their respective websites. What are basic and necessary settings that you must ensure for .htaccess file? That is if your site is hosted on the web server Apache.

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Like you said .httaccess file is very powerful, what you need to add or remove to it depends on what you are trying to achive. There is a pretty lenghty post here about .httaccess files including and example .httaccess file.
If you are not on Apache, other web servers such as IIS servers have their own ways of doing same thing .httaccess file do on Apache

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I have used .htaccess file to setup mod rewrite rules for my website in php. I mean to change how my links look in browser.