Your animals will be happier outside, thus giving more milk and whatnot. It just makes them like you better. That's good, especially for a horse since you can ride them once you get two or more hearts.Originally Posted by XLaw
The fence is to keep predators out. I'm not sure if it's a necessity in MM, but it was in previous HM games so I just put one in just in case.
If you haven't figured this out already, here's a hint. Your animals are happier if you hand feed them instead of putting their feed in the trough. Basically you just face the animal and hit A (or whatever button you press to drop the food). You'll know if the animal's been fed by the color of his name changing to green? and by his happy moo/neigh/etc.
I'm not sure if you can do it with chickens, but I think you might be able to.