Sheep are born with long tails. Most farmers remove these tails, since sheep have been selectively bred to be covered in a thick layer of tangled wool. If the tail is left intact, it often becomes encrusted with the sheep's own shit, attracts flies, and causes the flies to lay eggs on the sheep, which burrow into the animal and can start eating it alive. This is what farmers are referring to when they describe an animal as "flyblown."
This lamb has an extremely tight elastic band around the base of its tail, placed there soon after birth, to cut off blood flow. That skimpy, wobbling bit is dead tail. It will drop off fairly soon.