Santiago's observation about the sheep having "forgotten to rely on their own instincts" helps to communicate how a significant aspect of being in the world is to not be "safe."  The sheep embrace a "safe" world of being.  They follow the herd.  They worry only about survival in terms of eating and drinking.  There is little risk taking in their means of existence.  Natural instincts of struggling, seeking to grow, and taking the risk of doing something different have become replaced with a sense of complacency. These elements that help to define nature are no longer seen in the sheep.  Santiago interprets this to be part of the human condition he sees around him.  

Such a dynamic foreshadows what will transpire in the novel.  This interplay between merely surviving and living life is what will guide Santiago, the eventual embrace of his own journey, and differentiating between the people he meets on it.  The forgetting of instincts that are essential to growth and struggle can be seen in characters like the crystal merchant as well as his father, characters who are more focused on the present than any possible transformational notion of the future.  At the same time, what it means to live life in terms of those instincts that inspire growth and raise challenge to the condition of what is and make it what should be are the elements that Santiago will embrace on his journey towards his Personal Legend.