Entering the EU is a complex process that has many checkpoints and hoops to jump through. How did Cyprus manage to fill it with a big chunk of territory being in revolt, wanting to secede and gain independence?
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First, the territory is not in revolt or wanting to secede. It is a part of the country occupied by Turkey, and de facto administered by it in all but name, supposedly in the name of the Turkish community in the island. Most of said community has meanwhile migrated abroad, and replaced with subsidized settlers from Turkey, but I digress.. The answer to your question is the threat of Greece’s veto.
A country’s accession in the EU can be vetoed by any existing Member-State. The 2004 Enlargement in the former Eastern bloc was seen as an extremely important move for EU security at a time when Russia was starting to recover from the dissolution of the Soviet Union. Greece threatened to veto the whole enlargement round unless Cyprus is added to the candidate member-states. Since all the big countries wanted to go through with the engagement asap, they were more willing to overlook those institutional problems of Cyprus for the sake of the big picture.
The conflict on the island may be frozen due to military guarantees, but the Cyprus dispute is part of the wider Greece-Turkey dispute which was, and still is, ongoing and subject to flare ups. By including Cyprus in the EU, Greece wanted to torpedo any Turkish scheme for the unilateral annexation of the northern part of the island, by making it de jure EU territory. It was a victory for Greek diplomacy at the time, but the matter still lingers unfortunately. In any case your understanding is right. Due to these problems, if the opportunity had not appeared in the early 00s, Cyprus would probably never be admitted in the EU via a standalone application.
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