The words it's, its sound the same but have different meanings and spellings. Why do it's, its sound the same even though they are completely different words?
The answer is simple: it's, its are homophones of the English language.
Contraction of it is.
Contraction of it has. See Usage Note at its.
Used as a modifier before a noun: The airline canceled its early flight to New York.
Definitions from The American Heritage® Dictionary of the English Language, 4th Edition and Wordnik.
Homophones (literally "same sound") are usually defined as words that share the same pronunciation, regardless of how they are spelled.
If they are spelled the same then they are also homographs (and homonyms); if they are spelled differently then they are also heterographs (literally "different writing").