Yes, they're often a beneficial choice because it means you are earning the interest on the money instead of the government.
You won't necessarily pay taxes on it, you have many options once you reach the point of wanting to do something with the money. Many people accumulate the wealth and then pass it down to subsequent generations without paying tax, which is perfectly legal if done right. Others make donations to charity.
Those are just a couple examples, but the point is that you accumulated the wealth over a long period of time and bought yourself time to decide what to do with it.
Edit: No, if the investor decides to cash the money out all at once at the end, it would not be equivalent.
Assuming you had $1,000 to put in an account and could get a 5% return on your money and you were in the 25% tax rate, the tax-free account ends up with more in the end (mostly by virtue of the compounding being tax-free):
Year 1 $750.00 | $1,000.00
Year 2 $778.13 | $1,050.00
Year 3 $807.30 | $1,102.50
Year 4 $837.58 | $1,157.63
Year 5 $868.99 | $1,215.51
Ending Amount $868.99 | $1,215.51