How does Napoleon use the sheep in Animal Farm?

Since the sheep are the most stupid animals on the farm, it is easy for Napoleon to indoctrinate and manipulate them for his own purpose. The sheep find it very difficult, for example, to memorize even the simplest of commandments, so Snowball simplified it for them to 'Four legs good, two legs bad,' as indicated in chapter 3:

It was also found that the stupider animals, such as the sheep, hens, and ducks, were unable to learn the Seven Commandments by heart. After much thought Snowball declared that the Seven Commandments could in effect be reduced to a single maxim, namely: "Four legs good, two legs bad."

They took a liking to it and would spend long periods bleating it repeatedly. 

When they had once got it by heart, the sheep developed a great liking for this maxim, and often as they lay in the field they would all start bleating "Four legs good, two legs bad! Four legs good, two legs bad!" and keep it up for hours on end, never growing tired of it.

Napoleon saw this as an advantage and used their incessant bleating at crucial points during Snowball's speeches. They would suddenly burst out repeating the maxim loudly when Napoleon realized Snowball was getting the upper hand. He had surreptitiously gained their support and trained them to do so in secret, as indicated in the following extract from chapter 5:

Napoleon was better at canvassing support for himself in between times. He was especially successful with the sheep. Of late the sheep had taken to bleating "Four legs good, two legs bad" both in and out of season, and they often interrupted the Meeting with this. It was noticed that they were especially liable to break into "Four legs good, two legs bad" at crucial moments in Snowball's speeches.

Later, after Napoleon had gotten rid of Snowball, he assumed leadership of the farm. He was now called 'Our Leader, comrade Napoleon', and changed the commandments to suit himself and the other pigs. They adopted human characteristics and behavior and exploited the other animals as much as Mr Jones did, whilst the pigs enjoyed lives of luxury.   

Napoleon's dictatorial rule reached its apex when he and the other pigs started walking on their hind legs. When Napoleon presented himself, he was carrying a whip. The animals were dumbfounded on witnessing this and would have protested, but then the sheep started bleating loudly: 'Four legs good, two legs better!'

It went on for five minutes without stopping. And by the time the sheep had quieted down, the chance to utter any protest had passed, for the pigs had marched back into the farmhouse.

This ignominy happens in chapter 10. The pigs had become absolute masters of the farm. Napoleon had, once again, used the sheep for his own selfish ends and had evidently instructed Squealer to teach them this new maxim to drown out any protest, as shown in the following extract from this chapter.

One day in early summer Squealer ordered the sheep to follow him, and led them out to a piece of waste ground at the other end of the farm, which had become overgrown with birch saplings. The sheep spent the whole day there browsing at the leaves under Squealer's supervision. In the evening he returned to the farmhouse himself, but, as it was warm weather, told the sheep to stay where they were. It ended by their remaining there for a whole week, during which time the other animals saw nothing of them. Squealer was with them for the greater part of every day. He was, he said, teaching them to sing a new song, for which privacy was needed.