In western musical theory, the term sentence is used in connection with musical spans towards the lower end of the durational scale; i.e. melodic or thematic entities well below the level of 'movement' or 'section', but above the level of 'motif' or 'phrase'. The term is usually encountered in discussions of thematic construction.
Since the word 'sentence' is borrowed from the study of (verbal) grammar -- where its accepted meaning is one that does not admit of straightforward application to musical structures -- its use in music is metaphorical; thus it is inevitably the case that different musicians and theorists employ and define the term in different ways.
Macpherson (1930, 25) defines a musical sentence as "the smallest period in a musical composition that can give in any sense the impression of a complete statement." It "may be defined as a period containing two or more phrases, and most frequently ending with some form of perfect cadence." Among the simplest examples he gives are what he calls 'duple sentences' -- themes (from Mozart's D major Piano Sonata and Beethoven's Third Piano Concerto) in which we find pairs of 'balanced' phrases (four-bar 'announcing phrase' ending in half-cadence, followed by four-bar 'responsive phrase' ending with perfect cadence): to many theorists this kind of structure is called 'period' or 'parallel period' or 'antecedent-consequent period'.
In Schoenberg's pedagogy (and that of theorists who follow his lead, such as Caplin), the term 'sentence' is applied to a very specific structural type (and regarded as distinct from the antecedent-consequent 'period'). In such a sentence's first part, a statement of a 'basic motive' is followed by a 'complementary repetition' (e.g. the first, 'tonic version', of the shape reappears in a 'dominant version); in its second part this material is subjected to 'reduction' or 'condensation' with the intention of bringing the statement to a properly 'liquidated' state and cadential conclusion.
In Schoenberg's view, 'the sentence is a higher form of construction than the period. It not only makes a statement of an idea, but at once starts a kind of development' (Schoenberg 1967, p.58).