The only thing you need to change is config/database.php. Nothing else. That is if your htaccess is correct.
I uploaded to byethost hosting and all worked. Please watch some of the free laracast videos.

Yes, but what if I have many environments? I would have many database.php file - one in config directory, the other one in config/local and the other in config/develop. It is working without a problem in Laravel 4.2 but it seems in Laravel 5 it doesn't work as it should. The whole application is working as it should, so htaccess is not issue here I believe.

I also posted more details on SO: http://stackoverflow.com/questions/27343021/laravel-5-configuration-environments-and-overriding

Remember, L5 is still in dev. Let the laravel team know about this. But it may be fixed anyway. Mention this on live chat also.

Laravel 5 use the ".env" file to configure the environment variables, you should set the values of your database there

so is this issue solved now?

micz123 said:

so is this issue solved now?

As mentioned above, L5 uses .env files for environment specific configuration.

http://laravel.com/docs/5.0/configuration#environment-configuration

https://github.com/vlucas/phpdotenv