They're well aware they are not dogs.

I don't think so. My border colli does the same with our chicken and with our kids.

That's pretty much how we think about dogs.

Depends on the type of sheep dog. Herding types like border collies definitely know sheep are different.

But the big, fluffy, white sheepdogs were bred to hang around with the flock so they might see the sheep as their pack which they defend.

I don't think so. Sheep don't smell like dogs.

What do Welsh people think?

I don’t know. Have you ever watched competitive sheep herding? I wouldn’t want to step in between that dog.

No, dogs know what a dog is, and also what a not-dog is. They clearly make distinctions, behave differently towards different things, and so on. They are neither as dumb as some people think, nor as smart as other people think.

Cats too, by the way, despite some claims to the contrary out there. Neither dogs nor cats act with the same behaviors they use with others of their species as they do with others of other species.

Pretty sure all dogs think all things that walk are just big or small, smart or dumb dogs.