OBEs are "awarded mainly to civilians and service personnel for public service and other distinctions". In the case of Damon Albarn, I can only assume that annoying the hell out of me by being a pretentious, opportunistic arsehole is considered a distinction.
I'm not alone in querying the award - take Jon Ronson, for instance: "Well I'll tell you if they gave out OBEs for being nice to me in a bar in the mid-1990s, Damon Albarn wouldn't get one of them."
Albarn is obviously happy and not at all uncomfortable or ashamed at accepting it. After all, there have been plenty of people who've decided to turn down honours.