AllowOverride not allowed here

It’s because you have to put it in <Directory> directive.’ .htaccess is per directory context, so you have to explicitly tell apache where .htaccess is allowed to be used.

<VirtualHost *:80>
  DocumentRoot /var/www/html
  ErrorLog ${APACHE_LOG_DIR}/error.log
  CustomLog ${APACHE_LOG_DIR}/access.log combined
  Options Includes
  <Directory "/var/www/html">
  AllowOverride All
  </Directory>
</VirtualHost>