Not by default, but since nginx is pretty flexible you can implement support for it, and it seems like people have.

There are some downsides with .htaccess files though; since it can change you need to at least check if it was modified since the last request, and since it's recursive (i.e. /foo/.htaccess applies to /foo/bar/file.txt) you may need to check several locations. Basically, it's a lot of stat() calls for every request.

The upside is that it's convenient; i.e. "tar xf somephpapp.tar.gz" and it "just works" without mucking about with configuration to disallow certain files, but this convenience comes with a fairly hefty performance impact, and it's only certain types of PHP apps that really take advantage of this.

I don't agree with the downsides - what you are describing is simply a bad implementation of this mechanism. At the very least, the files could only be checked every 5 seconds, or inotify or similar mechanism could be used.

The main upside is that it is possible for sysadmin to allow 3rd party users to change parts of http server config via ftp (!). And last I checked, php was dominating web landscape - I would argue that the convenience of deploying plays a large part in this.

Plugins... If it is not part of original app, can I trust it will stay available? I might as well use Apache instead.