How does Gunn diode generate oscilations?
It is possible because Gunn diodes are usually made of compound semiconductors (usually N type) therefore there are two energetic valleys of different value. See the picture below. What it means is  that if you add strong electric field, electrons will climb up the valley and have higher effective mass so they won't be as fast as the ones in the lower energetic valley. Electrons will start to pile up there at the higher valley forming a domain of electric field which will travel across the structure bringing diode into negative resistance region. As this domain reaches the end of a structure, it dissolves and new domains can be formed.