The sheep are important in this story as they help to consolidate Napoleon's power base by supporting whatever he does. They have no mind of their own and blindly follow whoever is in charge. They repeat the slogans adopted by Napoleon's party, deafening the other animals with their loud bleating and making it hard, if not impossible, for any one to voice opposition to Napoleon's imperious ideas and ruthless tactics. Together with the dogs they show blind loyalty to the ones in charge. The dogs help to enforce Napoleon's rule by using brute force to keep the animals in fear; the sheep support him verbally.
The sheep can be taken as representative of the masses in human society, who unwittingly follow others without ever stopping to think things out for themselves. The socialist ideal of making everyone equal and giving everyone some power in society is seen to go wrong when weak, easily manipulated, unthinking creatures like the sheep do nothing but support a tyrant.