Great question!
In a sealed terrarium, CO₂ and water (H₂O) (in the presence of photons from sunlight) are converted into sugars (CH₂O)_n and oxygen (O₂) by plants through a process call photosynthesis. Plants release litter (dead plant material) that gets decomposed (eaten and metabolized) by small organisms (like bacteria and fungi) in the terrarium’s soil. This process releases CO₂ back to the terrarium air and consumes O₂ (it also releases nutrients which plants take up by the roots to grow). Plants also metabolize some of the sugars they produce (they breathe too!), therefore also consuming some O₂.