How negative resistance feature of Tunnel Diode is used in oscillators?
If we short the diode for a bit, you can see that we have a regular LC circuit with some voltage applied; it will oscillate normally, but it will suffer from damping - because of Rp -and the oscillation will stop after a while. 
Now if we add the diode, the negative resistance will cancel Rp and the oscillation will be sustained. R1 and R2 voltage divider keeps the diode biased in the negative resistance region.