We located the cat's toy under the chair. The cats' toys were tattered after years of play. The Smiths' own two cats and a dog. The Jones's dogs chase cats. A verb contraction shortens a verb or verb phrase, matching informal English speech.
Contractions join with verbs or pronouns.
Avoiding contractions when writing fiction results in stilted dialog, while using too many reduces the effectiveness of writing. The possessive forms of these pronouns do not use an apostrophe, while the verb contractions do use apostrophes. Its hair is long and black. I think it's a beautiful cat. Some writers avoid commas altogether, while others use them too often.