It's used to show possession or ownership, like in these examples:
* The word's meaning is clear.
* I like the book's cover design.
* The dog wagged its tail, excited by the word's sound.
Important Note: When a word ends in an "s" sound, you can also use the apostrophe alone to indicate possession.
For example, you could say:
* The words' meanings are clear.
However, it's generally more common and clearer to use the traditional apostrophe-s form ("word's") unless you're trying to avoid the awkward repetition of the "s" sound.