It's is a contraction, which means two words squeezed together with an apostrophe taking the place of a missing letter. Specifically, it's combines “it is” or “it has” into one shorter word.

You use it's when you mean “it is”: It's raining outside means “It is raining outside.” Or when you mean “it has”: It's been three days since I saw my friend means “It has been three days since I saw my friend.”

Many people confuse it's with its, which looks almost identical but means something completely different. The word its (without an apostrophe) shows possession, like the dog wagged its tail. Think of it this way: if you can replace the word with “it is” or “it has” and the sentence still makes sense, use it's. If you can't, use its.

This confusion trips up even skilled writers because possessive words usually do have apostrophes, like Sarah's book or the team's victory. But its breaks that pattern. When you're writing and pause to think about which one to use, you're doing exactly what good writers do: taking care to get the details right.