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varactor diode is a non linear device the capacitance varies with applied voltage of an exponent factor negative fractional value
A varactor diode is a type of diode whose capacitance varies as a function of the voltage applied across its terminals.Edit
We know that holes are majority charge carriers in P-type semiconductor material and electrons are majority charge carriers in N-type semiconductor material. There is a neutral space charge region (Junction) between these two which do not have any majority carriers. There are two plates in the capacitor between which there is a dielectric materials.
You very well know that if distance between the two plates of capacitor is increased than its capacity reduces. Opposite to it if distance between the two plates is reduced than dielectric between them will also reduce and due to which its capacity increases. The same thing can also be seen in the varactor diode. When varactor diode is reverse biased than the neutral region between P and N layers increases and when the reverse biasing is decreases then this neutral region is also decreased. From this, it is concluded that diode also has the capacity like a capacitor the difference is only that capacity in the capacitor varies due to dielectric between the two plates and in the diode capacity varies with the neutral region (junction barrier) thus dielectric region of the capacitor can be considered as neutral region of the diode and in this way diode can be considered as capacitor whose capacity change with the reverse voltage. All the diodes changes their capacity with the reverse voltage but some diodes are manufactured specially which changes their capacity with the reverse voltage of a definite capacity range. These varactor diodes are available from 20 pF To 500 pF value.  These are mostly used for signal modulation and demodulation.
What is modulation and demodulation?Edit
Ans. The method used for transmitting weak signal to a longer distance is known as modulation. In this weak signal wave is overlapped on the high frequency wave and then it is transmitted as a result the strength of signal does not reduces even at the longer distance. Demodulation is just opposite of modulation. In this process, high frequency wave is removed from the modulation signal and main signal wave is received in its original state.