You put [sic] within a quotation to show that you know the thing you're quoting has some sort of grammatical error or unusual usage.
So: "The dog was seen eating it's [sic] dinner."
The [sic] indicates that, yes, I know, it should be its, but the rules of quoting someone mean I'm not at liberty just to change their wording. My options, therefore, are adding [sic], or using an ellipsis and brackets, thusly: "The dog was seen eating . . . [its] dinner."
In the first, I just admitted that I saw the mistake but that it was not mine; in the second, I used an ellipsis to indicate an omission (granted, only one word) and used the brackets to re-orient my readers.
This is prompted by this quote, from Peter David's post on Bush's commuting Scooter Libby's sentence (which is a rant for another day, but for the record -- how smarmy can you get?): "George Tenet provides faulty intel on Iraq? Medal. Horrible treatment of detainees at Abu Ghirav (Sic)?"
Okay, I appreciate that you don't know how to spell Abu Ghraib -- of course, a simple google search would probably have netted you the answer. (I used "Abu Graib prison Iraq" and it popped up the spelling correction right away.)
But in Internet parlance, you did not mean "(Sic)." You likely meant (sp?). You were not quoting someone else; therefore, you may not use [sic].
I know I'm a grammar nerd; I also know that, given that I started elementary school in the early 80s -- in the age of Whole Language and new math -- I was fortunate to go to a private school where the teachers were distinctly "old school" in their teaching approach -- phonics, direct grammar instruction. I remember having to re-do an assignment in 3rd or 4th grade in which I used their, they're, and there incorrectly.
But, gosh, what on Earth is happening to the English language?
By the way -- i.e. means "that is," while e.g. means "for example." The two are not interchangeable.
1. I have a headache; i.e, my head hurts really badly. --> I have a headache; that is, my head hurts really badly.
2. J. has lots of good rote skills; e.g., she can add, subtract, multiply, count by 5s and 10s. --> J. has lots of good rote skills; for example, yadda yadda yadda.