What is the best practice to use when using PHP and HTML?

There are varying opinions on this. I think there are two good ways:

Use a templating engine like Smarty that completely separates code and presentation.
Use your second example, but when mixing PHP into HTML, only output variables. Do all the code logic in one block before outputting anything, or a separate file. Like so:
```
<?php $content = doSomething();
   // complex calculations
?>
<html>
<body>
  <?php echo $content; ?>       
  <div id="some_div">Content</div>
</body>
</html>
```

Most full-fledged application frameworks bring their own styles of doing this; in that case, it’s usually best to follow the style provided.