The letter “s” is used with an apostrophe to indicate possession — as in “my aunt’s pen.” The usage goes back over 1500 years, around 450 AD, to Old English, language of the Anglo-Saxons. The language had deep roots in Latin, Ancient Greek and Sanskrit which produced a complex system of noun declensions and verb conjugations, most of which have gone now, leaving mere remnants (like this curiosity of possessiveness).
How did the genitive case work? Important nouns were given the ending “es” to indicate the genitive — the possessive case — like “the cloud’s velocity.” As time went by more and more nouns were treated like this, so by the Middle English period (1000–1400) this method of indicating the possessive applied to all nouns. But by then the letter “e” in the “es” was no longer pronounced and was redundant.
So about the middle of the 1500′s English printers began to omit a silent “e” and replace it with an apostrophe, which was hitherto a French practice. Hence “my auntes pen” became “my aunt’s pen” and remains like that today.
The practice is way behind us, so “the cates pyjamas” has become “the cat’s pyjamas”. We no longer recognise our ancestores ways!
Those thirsty for more can visit Wikipedia on Old English.