And needing to sometimes fly a bit before you can land safely is, well, the whole idea behind ETOPS. For those unfamiliar with the acronym (officially: "ExTended OPerationS", sarcastically: "Engines Turn Or Passengers Swim"), it refers to a certification process for twin-engine aircraft, to demonstrate that they can safely operate far from any airport, since their engine reliability is sufficient to allow extended periods of single-engine flight if and when necessary.
An ETOPS rating is given in minutes. For example, ETOPS-60 would mean the plane is approved to fly routes that might require up to 60 minutes of single-engine flying in order to reach a landing site after one engine fails. The Airbus A330 is approved (depending on the exact variant and configuration the airline buys) for either ETOPS-180 or ETOPS-240.
There may still have been other overriding reasons not to land at the closest airfield in this case. We just don't know enough yet.
[1] http://avherald.com/h?search_term=overweight+landing&opt=0&d...
Was it an avionics issue instead? Two previous issues[1] have occurred in the same airspace (near Learmonth) with similar Airbus aircraft from Qantas.
"The incident again fueled media speculation regarding the significance of the Harold E. Holt facility, with the Australian and International Pilots Association calling for commercial aircraft to be barred from the area as a precaution until the events are better understood, while the manager of the facility has claimed that it is "highly, highly unlikely" that any interference has been caused."
[1] https://en.wikipedia.org/wiki/Qantas_Flight_72#Subsequent_Qa...
My other thought as to why they went back is that they could get the aircraft repaired more easily there.
Anyways, glad it turned out alright!
If the worst happens an overweight landing is an option, it's just not desirable. The landing gear should be able to handle it without collapsing but may take significant damage.
The A330 doesn't have fuel dumping nozzles as standard equipment so that may not have been an option.
Edit:
From a slightly dodgy source http://www.pprune.org/tech-log/117765-a330-fuel-consumption.... they'd burn 6 tonnes on takeoff and another ~7 in the 1.5 hours before the engine failed, and approx another 7 before landing but I don't know what the consumption would be like for a single engine return.
That gives 20 tonnes total fuel burn. At those figures the 5:40 flight would take 41.5 tonnes of fuel, plus a bit extra.