Ok, this is kind of silly, but do horse's have belly buttons?
It was a very sunny day today and I was grooming my boy and noticed what looked like a belly button. It's just in front of his sheath area and it kind of looks like scrunched up scar tissue. It's a little bit of an outie too. A little bit further forward, all his belly hair cowlicks into one central spot...or is his belly button under there?
Delregans Way has it right :) Horses are sustained inside their dams just like we are - with umbillical cords... that gets severed when they're born, and it shrivels up to make a lump on their bellies - probably right in front of your horse's sheath, like you mentioned :)