You're absolutely right, but technically an elision can be a kind of contraction (here it's the case) "Elision" is more precise than "contraction", but it still technically a contraction. French grammar books use the term "elision", and English grammar books or sites use the term "contraction", for instance: http://french.about.com/library/pronunciation/bl-contractions.htm
To understand the difference between "contractions" and "elisions", wikipedia gives a good way: "Not all elided words are contractions and not all contractions are elided words (for example, 'going to' → 'gonna': an elision that is not a contraction; 'can not' → 'cannot': a contraction that is not an elision)."
When the final vowel falls it's for two phenomenon
1) elision : when a final vowel meet another one of the next word the pronounciation bumps into, to avoid the hiatus the final vowel falls living an apostrophe to witness. So we have the "liaison" ,an armonius union between the two words
Je aime>j'aime pronounced jaime, we don't detect no separation among the words.
2)Apocope: a term designating the omission of one or more sounds or syllabes from the end of a word.
it won't say l'eau slower,it's just one word...(well two but it counts it as one)
French nouns are only rarely used without a modifier: an article (indefinite or definite) or a possessive adjective, or a demonstrative adjective, etc.
"le, la, l', les" are definite articles, all potentially translatable in "the", depending on construction and meaning.
l' is used instead of le or la if the noun starts with a vowel or a non aspired H: l'eau (fem), l'avion (masc), l'homme.
In all cases where you would use "the" in English, you can be certain that the French translation will have le, la, l' or les.
However, when the French sentence uses "le, la, l' or les" those do not automatically translate to "the".
les hommes sont plus forts que les femmes = men are stronger than women (generality, universal truth)
la fille a les yeux bleus = the girl has blue eyes
this phenomenon is called "elision" and it prevents the sound conflict between 2 vowel sounds.
- la | eau would generate an awkward sound with LA-O
Therefore, the "a" is replaced by an apostrophe: l'eau = LO
The same rule is valid for vowels and non-aspirate H:
- NOT "le homme" but "l'homme"
There is a series of small words that can elide in front of a vowel sound: le, la, je, me, te, se, que, ne:
- j'écris (I write); il m'écrit (he writes to me); je t'écris (I write to you); ils s'aiment (they love each other); je pense qu'elle est jolie (I think that she is pretty); je n'aime pas le vin (I don't like wine).