In butadiene I can see how the electrons can delocalize. But for cyclopentadiene I don't really see how the electrons can delocalize because of the sp3 carbon though. How would it delocalize?
I'm struggling to see why you are happy with butadiene but not cyclopentadiene. If the pi bonds are adjacent to each other, they are conjugated (barring any conformational effects that prevent them being coplanar).
Ok, so think about butadiene - no problems there.
Now think about 2,4-hexadiene. It's exactly like butadiene, just with a methyl group at each end. An sp
3 atom at each end of the conjugated diene.
Now cyclopentadiene, that's just like 2,4-hexadiene - an sp
3 atom at each end of the conjugated diene.