The most common flexible reports are based around people and whatever the question will return one person per row (instead of one donation, ticket booking etc per row). Computers are very stupid and can only answer questions asked in a particular way. Sheep helps you ask those questions by building a report one filter (or question) at a time.
e.g. Which members live in Norfolk?
All contact based reporting starts without any filters so all (undeleted) contacts are shown. This example question has two parts (members vs non members) and (people with an address in Norfolk). The order of the questions doesn't matter.
Contacts with an address county of 'Norfolk'
Membership status is Active
Clicking update after adding rules will update the list of contacts shown. When you are happy that the filters are showing you what you want close the filter builder and move to 'Actions'.
See this more detailed article on all available actions, the first and most useful action is to export to Excel.
When choosing a filter the large drop-down field selector will show you all available fields grouped by category. If you don't see a field that you are looking for check the 'infrequent' fields at the bottom of the drop-down.