I've got an indoor pasture (soilgrass, yum!) of about 30x30 (at first only my milker and shearer were allowed in there, for pathing purposes, but then I got stupid and put my furniture stockpile on the other side...) and about 20 sheep. None of them have had any "closeness" combat.
Are you sure? I didn't think mine were fighting either, until I hit "r" to check my reports. Yow. (After checking my logs I'm just surprised none of them have actually died of blood loss except for one cavy.) Also are you playing 3.21?
So yeah, I don't see my animals "spread out" as much (although they're supposed to) because they're too busy crowding on each other and fighting. *sigh*
(I also can't seem to get "grass" to grow very well underground. Le sigh. So much for my nice underground pastures.)