PHP may try to invoke many system commands to move or directly edit files on the hard drive. Whether this is successful depends on the security settings.
Suppose your PHP launch through apache and apache is configured to run all processes as user www data - the default setting for an OS such as Debian. If you give the user permission to www-data for editing / etc, then yes, PHP can read and write files to / etc
There is only one major flaw that you have identified; security, safety and security. You can also be sure that your PHP is working correctly, since 1 incorrectly written file can now delete the entire server.
I definitely will not train on your server for your bosses either. Look at getting a cheap virtual machine, either hosted elsewhere, or on your own VirtualBox replicated computer
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