In a technical sense, an offset account does not pay interest. Instead, it prevents you from paying extra interest on a home loan. An interest-bearing account is similar to a savings account in that it calculates interest based on the amount in your account up to a certain limit; it usually has much lower rates on average than home loan rates; and it requires you to pay tax on any interest earned because it is considered income.
While you may only receive a small amount of interest in a savings account, the money works considerably harder in an offset facility, saving you thousands of dollars rather than earning a moderate amount of interest as you would in a bank.