That is an apache virtual host definition, which has to go into your apache config.
I personally use separate config files for that. In my /etc/httpd/conf/httpd.conf I have as last line:
include /etc/httpd/vhosts/*.vhost
Then in this directory I have a file like (using your example) local.blog.vhost, containing the above definition. This allows me to manage my configs separately.
Don't forget to restart apache after you made changes to the config. And in this case create a hosts file entry to map local.blog to 127.0.0.1.
I want to up this old question in some new aspect.
I used my installation of fuelphp in a folder of my test server and it was configured to point http://someservername/fuelphp-folder/ as a baseurl. If I want to replace it for virtualhost and I have maked all necessary configurations with my Apache server, then what I have to do with my fuelphp installation to repoint it in the public folder?
If I don't want to reinstall fuelphp in the virtual host, can I make some manual changes into the files or the links to do that? What exactly?
No experience with Novius, but for all FuelPHP apps, the DocumentRoot in your virtualhost definition must point to the folder that contains the frontloader (= index.php by default).
This is related to the horrible frustration I just went through. 2/3rd of the day just getting mod_rewrite to allow things to work without 'index.php', E.g.: