He did not offer them land in Rome, if by "Rome" you mean the place on the Tiber in central Italy. According to Cassius Dio (36.37), he offered clemency to those that surrendered without a fight and, apparently ad hoc, gave them land in areas where they would be welcome or tolerated (Dio mentions a city on the Cilician coast which had been depopulated by warfare). To my knowledge, we only hear about this in the campaign of 67, during which the lex Gabinia gave him sweeping powers to flush out the Mediterranean west to east. During this period of broad imperium, he was apparently empowered to make settlements of the pirates in this manner, because his imperium extended 50 miles inland from the sea coasts. Presumably the Senate had to approve the arrangements later, but I don't know if we ever hear about that. They would have turned themselves in to elements of Pompey's fleets, or probably to the first Roman military force that cornered them. The smart ones would make sure to be captured by Romans who knew or cared about Pompey's generous offers.

As to the benefits: Dio doesn't say they were made citizens of Rome. They would have gained the same status as the city to which they settled (and the status of cities was wildly variable in 67 BCE). The benefit for them was the opportunity to escape death at the hands of Pompey's flushing operation, and to get a chance at a fresh start. The assumption was that many had turned to piracy because their livelihood had been disturbed during the upheavals of the late 2nd and early 1st centuries BCE. If any one of them had non-piratical skills, like smithing or farming or whatever, they could presumably go back to that with a "clean slate." Many of them probably continued to sail, just in a less marauding sense.