'Iets' can mean 'anything', but not in this context. It means 'something' here.
'Het schaap eet iets' implies the sheep is eating something. We don't know what that something is, but he's eating it.
'The sheep eats anything' would be 'Het schaap eet alles' and implies that it doesn't matter what you feed the sheep, he'll eat it.
An example of 'iets' used as 'anything' for the people who are interested:
'Did you have anything in mind?' - 'Had u iets in gedachten?'