Offsetting entry is nothing but to manage the debit/credit entries. If one acount is geting debited, then some other aount should be credited to nullify the same. So for this purpose we are using Offseting entries.
1. The purpose of T/E key PRD is for price difference account.If you maintain standard price for a material and if there is price difference between standard price and PO price, then this key will get triggered.
2. Yes you are right, for that movement type and valuation class, always that particular G/L account will be triggered.