Audio is AC or alternating current. It varies above and below 0Volts. Think of it this way. Imagine a wave in your favourite audio program. The max level is "100" for the sake of understanding. So if you're looking at the waveform, everything above the center line is a positive value, and everything below it is a negative. A nice healthy wave would have a positive max of "100" and a negative max of "100".
DC offset is introduced in the analog electronics somewhere. The value of the off set is "1". That means now that your wave has a max positive level of "101" and a negative of "99".
Let's say that you have a kickin' mix that you want to have as loud as possible. If you have a substantial DC offset, the positive and negative side of the wave will not share equal "loudness" and you will, in fact, not have the same output as if the wave were not offset.
Another easy way to explain this and it's effects is a loudspeaker driver. When there is no voltage present, the driver should do nothing. If a positive voltage is present, the driver should move away from the magnet, and a negative voltage, toward the magnet.
Let's use our values of "100" and "1" again. After introducing our offset of "1", the speaker doesn't receive zero volts and relax when there is no "audio" program, it remains held at a value of "1". You are essentially sending a constant "DC" voltage to the driver.
Since our speaker driver is physically limited in movement, imagine as you start to reach it's limits of excursion. In one direction you are maxed out, and in the other direction you are not. Seems a waste doesn't it? It is.
Now, after all that is said, DC offset is not a serious problem unless it is extreme. You can rip lots of commercial CDs and they will contain DC offset. Removing DC is good housekeeping, but will not a make or break the deal.
Oh yeah, did I mention it's an analog issue not a digital one. It's introduced by some element in the analog path. It's just easier to fix in he digital domain...
I hope this helps you visualize what is going on.