My only other thought before deciding to explore the possibility of dementia, would be eyes - has she had an eye check recently? Knowing shelties can have eye issues, it might be worth checking. If her sight is troubling her that would explain a lot, including wanting to be near you.
But I can see why your vet might be thinking dementia. The only thing is, it is not life-threatening, and dogs can be quite happy with it. We thought my grandmothers cat was going senile, but it turned out to be underlying health problems (teeth and kidneys), but of course animals mask things so well.
At the end of the day, as long as she is happy and content that is what matters most.
More hugs to Callie and you x x