How does this color offset compensation work? Does it require sampling of neighboring pixels, which sounds like a great increase of cost?

Are there any other methods to compensate for distortion?

Here's a paper on evaluation of chromatic aberration methods:

https://www.researchgate.net/publication/314788222_EVALUATION_OF_CORRECTION_METHODS_OF_CHROMATIC_ABERRATION_IN_DIGITAL_CAMERA_IMAGES

From the abstract, they evaluated two general approaches: "The chromatic aberration correction methods evaluated in the experiment are classified into two kinds. One is the method to correct image coordinates by using camera calibration results of color-separated images. The other is the method based on the assumption that the magnitude of chromatic aberrations can be expressed by a function of a radial distance from the center of an image frame."