The apostrophe is used in writing contractions — that is, shortened forms of words from which one or more letters have been omitted. In standard English, this generally happens only with a small number of conventional items, mostly involving verbs. The apostrophe appears precisely in the position of the omitted letters: we write can't, not *ca'nt, and aren't, not *are'nt. A few words that were contractions long ago are still conventionally written with apostrophes, even though the longer forms have more or less dropped out of use (o'clock, Hallowe'en). Contractions must be carefully distinguished from clipped forms. A clipped form is a full word that happens to be derived by chopping a piece off a longer word, usually one with the same meaning.

Source: University of Sussex