The last defender acts as a sort of moving offside line. As long as an attacking team's player isn't closer to the goal than that last defender when he receives a pass, he's onside. Basically, it shuts down any cherry pickers from taking a long hail mary pass and rushing in on goal.
And it's unlike hockey where a team has to clear the zone before the attacking players can re-enter - as long as the offside player isn't involve in the play, it's a passive offside or some such and the refs won't call it. Or maybe they will. After this world cup, I'm a bit less certain about what's a penalty.
