The phrase has a biblical origin, referring to judgement, where 'sheep' represent the righteous and 'goats' the less desirable. At the charity audition, they needed to sort out the sheep from the goats to find committed volunteers.
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Metaphoric Meaning
Used metaphorically, it doesn't involve real sheep or goats. It's about judging the quality or suitability of people or things. The quiz competition will sort out the sheep from the goats among the students.
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Common Confusions
Avoid confusing this phrase with literal animal sorting. In speech, emphasis on 'sort out' clarifies you mean figuratively. It can be a challenge to sort out the sheep from the goats when looking at online reviews.