The purpose of making an offer of settlement to the other party is twofold. Firstly, you may actually resolve the dispute between you and the other party, thus saving time and legal costs.
Secondly, should your matter proceed to a final hearing and the court ultimately awards you a more favourable outcome, then the terms of your offer of settlement is one of the factors the court will consider, in determining whether to make an order that the other party pay some/all of your legal costs from the date you made such offer.