Why is there a distinction between "its" and "it's"?

While I know technically the English language has a distinction because when there's a conflict between the possessive form and a contraction, the contraction wins. That is:

• Its is the possessive form of it—and this will presumably be followed by some form of noun spec or something.
• It's is short for "it is" or "it has" (as in "it's been years since...").

The rule of thumb I use to remember this is that it follows the same pattern as whose and who's, for which the correct use is much more obvious.

While technically I see why there's (ha ha) a distinction, I can't think of any case why it really needs to be there, because for every use of either construct, the meaning intended is usually (if not always) obvious from context. Case in point: many questions and answers written on the Stack Exchange network are written incorrectly, yet nobody notices or cares. (Usually in my case, I default to "it's" then realize I screwed up)

As a single word, I could see why it'd be ambiguous, but I don't see why in typical prose it would matter.

Is there a specific reason for this in earlier dialects of English, or specific cases where choosing the incorrect form leads to lack of understanding of a particular sentence?

Solution 1:

It's not about a contraction "winning" over a possessive. "Its" is the possessive form of "it", like "his" is of "he", "her" is of "she" or "their" is of "they". There is no missing apostrophe; the forms go back to a time when English was a highly inflected language. It predates modern, or even Middle, English.

The possessive formed by the apostrophe+s construct is a more modern, uninflected, less-marked form. There are only a very few commonly used words — pronouns — that still use the older forms. Markedness tends to survive in words that are used very frequently, even when other aspects of the language are losing their markedness. It's the same reason why we still say "men, women and children" rather than "mans, womans and childs" when the plural ess marker is nearly universal in the rest of the language.

Solution 2:

T. O. Churchill, A Grammar of the English Language (1823) identifies two somewhat surprising culprits as being responsible for the deplorable rise of the apostropheless its: printers, and English speakers who inexcusably use of the wrong contraction for "it is." Here is Churchill's argument:

The word it's in particular, is now generally robbed of the apostrophe by printers ; so that we seldom find it with the sign of the possessive case, which it unquestionably is ; unless when an author is determined to persevere in the right, in spite of a silly practice.

...

Some, very improperly, use it's instead of 'tis, for the contraction of it is: and hence many profess to omit the apostrophe in the possessive case it's, lest it should be confounded with a word, that ought never to occur.

Throughout his book, Churchill demonstrates what perseverance in the right looks like, sparing no effort to keep the raft of correctness afloat in a hostile sea of actual usage by always using it's (with an apostrophe) as the possessive form of it, and by never using it's as a contraction.

Solution 3:

There is something to add here. You can tell a person's age with regard to this one, because older books use "it's" as a possessive. A friend, a few years older than I (I'm almost 50) showed me this in her college grammar book, dated about 1965 or so. The rule was updated somewhere around that time so that "its" became the sole possessive, while "it's" became a contraction only. When I see a good writer who frequently uses "it's" as the possessive, I check his/her age and am almost always correct that it is someone over the age of 60. It is often seen in the original unedited versions of classics. The online book "The Grammar of English Grammars," written c. 1852, agrees.