The film features a sheep that lives in the American West. His elegant dancing is popular with the other animals. One day the sheep-shearers arrive and shear him for wool. Having lost his coat, the other animals laugh at the sheep and he becomes shy and loses the confidence to dance.
It is whilst in his bare state that a benevolent jackalope comes across the little lamb and teaches him the merits of "bounding", not just dancing (that is, getting up whenever you fall down). The sheep is converted and his joy in life is restored. The sheep's wool eventually grows back in the winter, only for it to be cut again, but his pride is now completely unshaken and he continues to "bound."