A: "Its" is a possessive pronoun used to show ownership, while "it's" is a contraction of "it is" or "it has". For example:
The cat licked its paw. (shows possession)
It's raining outside. (contraction of "it is")
It's been a long day. (contraction of "it has")
Another common grammar question is the difference between "there", "their", and "they're". "There" refers to a place, "their" is a possessive pronoun, and "they're" is a contraction of "they are". For example:
The books are over there. (refers to a place)
Their house is on the corner. (shows possession)
They're going to the movies tonight. (contraction of "they are")