I'm not completely sure what you mean by not 'understanding the functionality', but here's a quick example that may help.
Enter something into cell C1.
Then in another cell somewhere, enter the formula: =OFFSET(B1,0,1)
Translated, this means "Display the value in the cell that is offset 0(zero) rows down and 1(one) column to the right of B1."
Now, it's usefulness doesn't seem apparent when used this way (after all, if you know how many columns & rows to offset from a specified cell like B1, it would be easy enough to simply refer to the cell you're after) but if you were to specify an offset from a named range for example, now it's usefulness becomes a bit more obvious.
Beyond that, Ralph's suggestion to check out the help file is always a good idea.