It's confusing if you try to apply phonetics or any kind of logic to it, as an ESL person might, or many native speakers for that matter.
It is certainly not confusing it you learn it by rote and remember the rule. It is burned into my brain, but I see the mistake a lot so I assume it is hard to remember for some people. For me its vs. it's is something I still have to keep looking up.
Let's not let the minority become the rule. I have only had one person ever come back to me claiming they were a non-native English speaker when having made the mistake over many years of correcting people.