Sheepdogs use two simple rules to gather sheep!

I think they're simplifying it a bit much. I read an article on herding breeds, a while ago, and how the different breeds have different styles of herding. Some will keep the herd together, like they explain in this article, but some will keep the heard in a certain area and just keep the sheep from leaving that area.

I dunno - I've heard of collies that will herd (or try to) anything and everything - children, chickens, just name it. Maybe it's a modified hunting instinct.