From reading the documentation (v2.2) about how various config sections
are merged, I thought I had deduced the correct behavior for the
following scenario:

<Directory />
Options FollowSymLinks
AllowOverride None
</Directory>

<Directory "/home/web">
AllowOverride All
</Directory>

<VirtualHost xx.xx.xx.xx:80>
DocumentRoot /home/web/site
ServerName my.server.name

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