Basically your sending unit is a bi-metallic unit. Power comes in on one side and, as the temp of the coolant warms up, the be-metallic strip in the sending unit reacts and causes power to flow through that produces a reading on the gauge. Any grounding that the sending unit might need is done through the block. If you want to test the sending unit, remove it from the block and fab up a test circuit for it consisting of the unit itself, a couple of wires with mini alligator clips connected to them that you can attach to the terminal ends, a 12V power source, a gauge or light for load, a toggle switch, and a cup or tin of hot water. You connect one lead from the sending unit to the gauge using one of the gater end equipped leads and then ground the gauge using a second lead. Your ground can be the neg terminal on the battery. The other terminal on the sending unit also gets a lead that goes to the toggle switch and then from it to the positive side of the battery. Put the sending unit in the cup or tin and fill it with hot water; just enough to cover the internal end of the unit as far as the threads but not enough to submerge the terminal ends. Flip the toggle switch on. If the sending unit is functioning it ought to respond by generating a reading that will appear on the dial of the gauge.
Some sending units can possess multiple terminals because they act as mechanical relays for power being sent to multiple circuits. One example would be a sending unit that delivers a reading to a gauge but also feeds power to an electric choke so that as the engine warms up the choke is encouraged to relax or open and allow the engine to slow down to a warm idle speed.