My position is that the definition of $\mathcal{C}$-valued sheaves for completely general categories $\mathcal{C}$ is not yet a settled matter.
For locally finitely presentable categories $\mathcal{C}$, the usual definition (by products and equalisers, by limits, or by representability) works well, in the following sense:
The category of $\mathcal{C}$-valued sheaves is a full reflective subcategory of the category of $\mathcal{C}$-valued presheaves.
Furthermore, the reflector (i.e. sheafification) preserves finite limits.
The category of $\mathcal{C}$-valued sheaves is locally presentable
(but not necessarily locally finitely presentable).
Furthermore, finite limits commute with filtered colimits.
Continuous maps contravariantly induce functors between the categories of $\mathcal{C}$-valued sheaves – the so-called inverse image functors – and these functors preserve finite limits and arbitrary colimits.
Furthermore, the mapping from continuous maps to inverse image functors is a contravariant pseudofunctor.
Categories of algebras for algebraic theories – this is a term of art! – are locally finitely presentable: for example, the category of sets, or abelian groups, or commutative rings, or Lie algebras; but not the category of topological spaces, or Kan complexes, or fields.
More generally, categories of algebras for essentially algebraic theories are locally finitely presentable: for example, the category of partially ordered sets, or preordered sets, or groupoids (with a discrete set of objects).
So the above should suffice for most purposes.
Now, suppose $\mathcal{C}$ is locally presentable (but not necessarily locally finitely presentable).
For the same definition of "$\mathcal{C}$-valued sheaf", it remains true that:
The category of $\mathcal{C}$-valued sheaves is a full reflective subcategory of the category of $\mathcal{C}$-valued presheaves.
The category of $\mathcal{C}$-valued sheaves is locally presentable.
But I do not know whether sheafification preserves finite limits, and it is not true in this generality that finite limits commute with filtered colimits.
I also do not know how to construct inverse image functors in this generality, though (as a special case) the usual construction of stalks yields a functor that preserves colimits.
As with sheafification, I do not know whether it preserves finite limits.
So we lose the basic properties we often take for granted when working with sheaves – which suggests, to me at least, that this definition is being stretched too far.