Sheep (and possibly other mobs, didn't test) can fall throw 1x1 halls, turn black and walk throw blocks. They can jump out
What I expected to happen was...
The sheep shouldn't be able to walk throw blocks or turn black
What happen was...
The sheep walked throw blocks, turned black and then jumped out
Steps to reproduce...
1. Spawn sheep (easier in fenced area)
2. Dig a 1x1 hole