How is a varactor diode used in a circuit when it only has 2 terminals?
you can't keep the diode at a constant reverse voltage AND use it in
  any type of circuit where an alternating waveform is applied.


Sure you can as the millions of varactor tuners produced will testify.



Of course, the AC signal must be relatively small.  From Wikipedia.


  When designing tuning circuits with varicaps it is usually good
  practice to maintain the AC component of voltage across the varicap at
  a minimal level, usually less than 100mV peak to peak, to prevent this
  changing the capacitance of the diode too much and thus distorting the
  signal and adding harmonics to it.