A few days ago, I saw a couple of squirrels were having some kind of argument; they chased each around my yard & up a tree, which had a bird house on it that was home to a family of house sparrows. The squirrels weren’t interested in the chicks as far as I could see, only in chasing each other around & around the tree, but when the squirrel’s disagreement brought them close to the sparrow’s nest, the parents flew out of the bird house, & started dive-bombing the squirrels. The squirrels were startled, & quickly retreated. It was amazing how they wouldn’t stand up to an animal half their size & a fraction of their weight. The sparrows must have pretty sharp beaks.
Here is a video of a bird fighting with a squirrel:
http://www.youtube.com/watch?v=U2DaaE5PKKs&feature=related
Song of the Wolf 
That must have been pretty cool to see!
Wow! That is unusual. The Sparrows do get very protective of their nests though. I have accidentally disturbed a Sparrow nest full of eggs that was in a very low shrub in my backyard. The parents just went ape! Such a lot of swooping, noisy chatter and blocking my way. I quickly got the message and left. So, the Sparrow vs. Squirrel is really interesting!
Sparrows have a lot of confidence in their quickness and flying ability. I’ve seen them harassing much larger birds including eagles. Feisty little guys, an endearing quality!