Sheep in wood, by the sound of it (3)
I believe the answer is:
ewe
'sheep' is the definition.
(a ewe is a female sheep)
'wood by the sound of it' is the wordplay.
'wood' becomes 'yew' (yew is a kind of wood).
'by the sound of it' indicates a 'sounds like' (homophone) clue.
'yew' is a homophone of 'EWE'.
'in' acts as a link.
(Other definitions for ewe that I've seen before include "One needing pastoral care" , "She'll provide material to knit" , "creature" , "Palindrome for a female sheep" , "Lamb's mother" .)