How does molecular orbital or valence bond theory explain the delocalised structure of benzene? I.e. when the carbon forms 3 bonds with other carbons/hydrogen, what happens to the remaining hybridised orbital?
The short answer is that it's not hybridized.
In benzene, the carbon atoms are sp2 hybridized. That means that each carbon's set of atomic orbitals is three sp2 orbitals and one p orbital. The sp2 orbitals are utilized to make sigma bonds to the adjacent carbons and hydrogens. The unhybridized p orbital contributes to the pi system.