Yes, the apostrophe there indicates that something has been elided (left out): o' clock is derived from of the clock. You also see this in will o' the wisp, jack o' lantern. You might notice that I put a space after the apostrophe - I am in the minority though.
It is normally considered better English to write small numbers (up to ten) in full so I would always write one o´clock rather than 1 o´clock in any formal writing.
When it comes to bigger numbers though e.g.11/12 o´clock, you would usually use the number.