Sheep

Sheep are passive mobs that supply wool when sheared or killed and can be dyed with any of the 16 colors before shearing to produce colored wool. Sheep are 1.25 blocks tall, 0.625 blocks wide and 1.4375 blocks long, and they naturally spawn in the following colors: white, black, gray, light gray, brown, and pink. Killing an adult sheep will drop a single block of wool, whereas shearing them yields 1-3 blocks each time. Killing a lamb gives nothing.

Appearance
82% of sheep upon natural generation have white wool. Others can naturally spawn in black, gray, light gray, brown or pink wool. They have light tan skin, are wall-eyed and have a pink square on their face, some see this as an open mouth while others call it a nose. When sheared the sheep's wool will be gone and will be seen in spots upon the sheep's back in a mottled pattern. However, this will stay white no matter what color the sheep's wool is and you can see its tanned skin. Also, when sheared, ears on the head are exposed and can be seen. In the free version of Pocket Edition they can be seen in even a wooly sheep. If you use a splash potion of invisibility on it, its wool will remain visible unless sheared.

Usage
Wool is easiest to obtain from sheep, as it can be tedious to craft wool using four string which is obtained by killing a spider or breaking cobwebs with shears or a sword. Wool can be obtained from sheep by using Shears on the sheep or killing the sheep. Shearing a sheep will produce 1-3 wool (1-4 blocks of wool in the Xbox 360 Edition). If you attack a sheep until it is down to 1 health, then hitting it with shears, it is possible to shear the sheep as it dies, and produce more wool than usual. Sheep regrow wool by eating grass and turning the grass block into a dirt block; they can also eat tall grass, destroying the block itself. Lambs eat grass much faster than adults. The sheep's head also moves down and wiggles to imitate eating, but a lamb's head goes inside the dirt itself.

Sheep will drop one wool when killed even if they are killed by fire, cacti or wolves. Wool can also be crafted using 4 pieces of string, but it is less hazardous for the player to shear sheep rather than hunt down spiders constantly. However, if you have a spider farm, that could be useful.

Beds can be important items on higher difficulties, especially when just starting as they allow you to avoid the danger of night. Thus, it is wise to hunt sheep in the first day on Survival.

A block of white wool can be crafted with a unit of dye to produce colored wool. However, a much more efficient method is to apply the unit of dye directly to an un-sheared sheep by right-clicking on a sheep (any color) while holding it. The dyed sheep can drop 1-4 blocks of colored wool when sheared. When the dyed sheep regrows its wool it will retain the dyed color, supplying an endless supply of colored wool. For this reason, sheep farms can produce infinite amounts of wool and sheep when bred. So if you like to decorate, sheep farms are recommended.

Sheep, along with horses, is the only farm animal that dosen't drop meat. However, Jeb states that he may add mutton to Minecraft.

Behavior
Sheep tend to be one of the lesser intellects in the game, and have been known to walk into lava. Like other passive land mobs, sheep wander around aimlessly, often spawning in flocks of 2—8. They can be heard bleating occasionally, even from some distance away. When they encounter an obstacle, they will often try to jump over it, which may cause some odd, and rather humorous, behaviour at obstacles they cannot overcome. This can be used with Pressure Plates to create constantly flashing redstone pulses, however the mobs will stop jumping after a while. Sheep can swim and make no attempt to stay out of water, therefore a common sight is several sheep bobbing in the sea. In Pocket Edition, they will stay there until a player pushes them out, since they are stuck there due to bad AI. A sheep's color has no effect on its behavior. Sheep will eat grass, turning it into dirt. This will make their wool grow back. The regrown wool will be of the same color as before the sheep was sheared, regardless of the original color. Packs of wolves may attack the occasional individual loner. If you are trying to capture a sheep for breeding or shearing, it will follow you as long as you are holding wheat or have a lead attached to the sheep. Keep in mind this can get very overwhelming if you are near a large flock of sheep as they will all try to follow you. Or it could be handy if you are making a large farm, which can be done by making them fall into a trench. However, you have to push them in Pocket Edition, as animals are not interested in seeds or wheat yet.

Breeding
Sheep can be bred with wheat and can be bred every 5 minutes. If the parents have 'compatible' wool colors (meaning that the corresponding dye items could be combined into a third dye color), the resulting lamb will be a mix of their colors (e.g., blue sheep + white sheep = light blue lamb). Otherwise, the lamb will be the same color as one of the parents, chosen at random. It doesn't matter if either parent has been sheared. This can be used to obtain large quantities of colored wool, rather than relying heavily on potentially rare dyes. (Lapis Lazuli requires fairly deep mining, and most of the others may be absent from your local biomes.)

The majority of sheep are white, with a 81.836% chance of spawning. The light grey, dark grey, and black sheep have an in-the-middle chance of spawning: 5%. Using a spawn egg to get one of these sheep types lies at a reasonable 15%.

Brown sheep have an uncommon 3% chance to spawn.

The rarest of the bunch is the Pink Sheep: a tiny 0.164% chance of getting one naturally. Because of this, it is much more reasonable to use dyes.

Trivia

 * Sheep were the second mob to spawn with both a separate body and armor file, the first being the pig; the sheep's "armored" state is wooly, while the pig's "armored" state is when they are wearing a saddle. Other mobs, like charged creepers, have armored states.
 * Sheep were the last mob added in Survival Test.
 * After being sheared, all sheep (regardless of their original color), will have remnants of white wool color on their head and legs.
 * Sheared sheep have a more slender head and exposed ears.
 * If you damage the sheep 7 hits (3 1/2 hearts) you can get 5 wool blocks by clicking both mouse buttons at the same time while holding shears, though it requires practice as you have 1/20 of a second between each mouse click.
 * Sheep are the only mob that give a block as a drop; all other mobs give items.
 * If a sheep spawner is placed via hacking, there will be a black sheep model spinning inside, but it will spawn only white sheep.
 * Lambs cannot be sheared but can be dyed.
 * Currently, if one were to sprint and knock back a sheep while the sheep is in its grass eating stance, it will eat the grass it gets knocked into, and it will take no attempt to run away after/while eating.
 * Sheep can eat grass through slabs, snow, and other partial blocks.
 * The bottom of the feet to sheep aren't rotated 180 degrees. A sheep hoof is split in the front.
 * Sheep can still eat grass even while moving in minecarts.
 * Sheep cannot fit through the gap if the 90 degree intersection of two fences is removed whereas the player can get through easily. This means you can have a sheep pen without needing a fence gate, although since this would allow creepers, skeletons & zombies to enter, it is not advisable.
 * Sheep are able to climb ladders.
 * Lambs grow seemingly faster than other baby animals.
 * Due to Potions of Invisibility only affecting the main texture of mobs, the wool of a sheep will still be visible while under its effect. Removing the wool by shearing will allow it to be completely invisible.
 * In Survival Test sheep used to graze and eat grass, turning it into a dirt block, and after eating three grass blocks, sheep would regrow their wool.
 * Sheep were originally planned to drop meat when killed.
 * A sheep will suffocate if spawned in an 1x1x1 space. This is because sheep are a little bit taller than 1 block.
 * There are 3 sound files for sheep. There are two "meheheheh" noises, one slightly higher pitched than the other, and a third "Behhh!"
 * The third "Behhh!" seems to be used slightly more often if the sheep takes damage.
 * It also sounds more like a "Baa" as it gets lower pitched.
 * Surprisingly, when a sheep walks or runs on ice it actually moves slower than it normally would. This is most likely due to ice being "slippery".
 * When a sheep is spawned on a fence, it will not fall off the fence but it can move to any adjacent fences.You can make it fall off the fence by leading it off with wheat.
 * When a sheep is spawned on a cobblestone or mossy cobblestone stone wall, it will fall "through" it.
 * When attracting a sheep with wheat, if a barrier is constructed between the sheep and the player, if it is one block high it will jump on and over the barrier. if it is a fence, cobblestone wall, mossy cobblestone wall, or over two blocks high it will maneuver around it.
 * In the free version of Pocket Edition, ears can be seen in the sheep's wooly state.
 * When spawning sheep in Pocket Edition, it will be as if they spawned naturally: 81.836% are white, 15% are grey or black, 3% are brown, and 0.164% are pink.