When I modify a .yaws file it take a few (5, 10) seconds for changes to take effect, it it normal and Do I have to keep terminal open while I use YAWS server?
When you modify a .yaws file, Yaws recompiles it to an Erlang .beam file, which contains bytecode for the Erlang virtual machine, and reloads it. This won't be instantaneous of course, but it should not take 5-10 seconds; you should report a Yaws issue in that case, and please include a test case.
As for requiring a terminal, Yaws can run such that it gives you an interactive Erlang shell, or it can be run as a background daemon if you supply the --daemon command-line option. Yaws comes with a number of startup scripts for running it as a daemon on various operating systems.