In graphite, electrons are:
(A) Localized on each carbon atom
(B) Spread out between the sheets
(C) localized on every third carbon atom
(D) present in antibonding orbital

Hint: Graphite is an allotrope of carbon element. When the same element is present in more than one form they are called allotropes.
Carbon is present in three forms in nature i.e. Diamond, Graphite and fullerene.

Complete step by step answer:
Carbon atom in graphite present in$s{p^2}$ hybridized state.
Electronic configuration of C is$ - 1{s^2}2{s^2}2p{x^1}2p{y^1}$
At ground state =

At excited state =

In graphite $1s$ and $2p$ orbital hybridize and form $s{p^2}$ hybridized orbital and one orbital remains hybridized.
Hybridized state=

Three hybrid orbits contain one electron each.
These electrons form a covalent bond with the hybrid orbital of other C-atoms.
Each carbon atom forms a covalent bond with another carbon atom. They form interlinked six membered rings of carbon atoms. The remaining half filled unhybridized $2{p^2}$orbital is used for$\pi $bonding. So that layers of carbon atoms i.e. graphite is formed.
 
Graphite has delocalized molecular orbital and delocalized electrons and is free to move in delocalized molecular orbital.
Therefore, electrons get spread between the sheets.
Therefore, from the above explanation, the correct option is B

Additional information:
Graphite is a good conductor of heat and electricity. The layer of carbon atoms in graphite can slide over another layer. So it is used in lubricants for reducing friction.

Note: Graphite forms hexagonal layers and these layers of carbon atom are held together by weak Van der Waals forces of attraction.
Carbon atoms have a unique property to link with itself called catenation. Due to this property allotropes of carbon form giant molecules.