If you are sharp-eyed, you see well, and you notice small things other people miss. A sharp-eyed teacher sees the student who did not really finish the work. A sharp-eyed child finds the tiny piece missing from a puzzle.

Sharp here does not mean the eye is pointed, like a knife. It means the seeing is keen — quick and fine. You can use it about people, and sometimes about animals. It is a kind description, not a rude one. It is a little more colourful than 'he has good eyesight', because it is about noticing, not only about whether you need glasses.