Sheepmen are passive mobs that are basically Nether Villagers. They fear Zombie Pigmen and flee at the sight of them. Sheepmen can have orange, red, or black wool, which can be sheared if needed. They will run to you if you hold gold, which they use to trade like the later Piglins, but in the standard Villager fashion.
Sheepmen come in three professions; Thieves, Alchemists, and Scavengers, who each offer different types of items to trade. Like the Traveling Merchants, Sheepmen will stay and build a home if given a block of their favorite material, in the Sheepman's case: gold.