premise: A man sitting on the street carves various vegetables into flowers and animals. hypothesis: A man sitting in the street.
entailment: To be sitting on something means to be physically located on top of the something.  If the something is the street, this means that the man is on the surface of the street; objects located on the surface within the confines of the street (if the man were outside the confines of the street, he would not be sitting on the street, but, rather, sitting next to the street or nearby the street) are referred to as being in the street.