show ownership, as in possession

• Mary's bike
• John's book

show omission of letters or numbers

• I was born in '66
• the car was made in '74

the tricky it rule

its shows ownership

• as in a dog's bone: its bone
• the house needs a new roof; its roof is damaged (its here refers to the house)
• The gym is cold. Its furnace is broke.

it's is a contraction for it is

• it's cold means it is cold
• the apostrophe substitutes for the i in the word is
• It's too bad we lost the game. Meaning: It is too bad we lost the game.

warning: do not use an apostrophe to make plurals