That's is a contraction, which means it squishes two words together into one shorter word. It usually combines that and is, so when you say “that's amazing,” you're really saying “that is amazing.” The apostrophe shows where the letter i got removed.

You use that's constantly in everyday speech. When you point at a bird and say “that's a cardinal,” or when you explain “that's why I was late,” you're using this contraction. It makes sentences flow more naturally than saying “that is” every time.

Be careful not to confuse that's with thats (which isn't a real word) or that by itself. If you can replace it with “that is” in your sentence and it still makes sense, then that's is correct. For example: “That's my backpack” works because “That is my backpack” works too. Sometimes that's can also stand for that has, like in “That's been a long day” (“That has been a long day”).