Warning: slightly NSFW for depiction of sheep birth.
What are the Dazzeloids? They’re characters created by Rodney Alan Greenblat, the character designer of Parappa the Rapper! They were made for a multimedia Playstation game released in 1994, two years before Parappa. I call it a game, but it seems more to have been one of those early multimedia products that’s mostly video clips given a loose connecting story, only in Dazzeloids case, the clips are very weird. The Dazzeloids (not Dazzleoids, as you might expect) have as their mission the liberation of minds and use creativity as a tool to that end. It’s all very nineties kids TV. The Dazzeloids are very obscure now, and don’t even appear on Rodney’s website, which is kind of a shame.
All of the Dazzeloids have a dream sequence on the disk that introduces them and tells you what they’re like, and the video above is the one for Stinkabod the Sheep, who might be the character on Lammy’s shirt. The video is very weird, but engaging, and definitely a Rodney Greenblat creation. The characters are of the same style as Parappa, and it doesn’t seem impossible that Stinkabod and his friends could exist in the same world.
Rodney’s creations are a bit more popular in Japan than in the U.S., where Parappa got an anime series and a line of merchandise. While you’re diving down this internet rabbit hole, you might also check out Rodney Greenblat’s personal site Whimsyload!