What changes occur when adding differing amounts of acids & bases? In an experiment, $\pu{5 cm^3}$ of $\pu{1 mol/dm^3}$ sodium
  hydroxide are gradually added to $\pu{10 cm^3}$ of $\pu{1 mol/dm^3}$ hydrochloric acid containing methyl orange. What changes occur in the mixture?
  
  
  The concentration of $\ce{H+}$ ions increase (decreases) 
  The methyl orange changes colour 
  More water molecules are formed (water is formed, but use of the word 'more'??) 
  A precipitate is formed (no ppt formed, $\ce{NaCl}$ is soluble)
  


I thought the answer would be (2). However when thinking about the question the methyl orange would be red in the acid and given the proportions of the reactants and the 1:1 mole ratio, the $\ce{HCl}$ would be in excess, so would it still change colour?
It is perhaps difficult to comment on the intended semantics of the option 3, but I think that is the most appropriate answer.

Option 1 and 4 are wrong because of the reasons you cite. 

To comment upon option 2, we need to know the pH range over which this indicator changes colour. According to Wikipedia, an unequivocal shift from red to yellow occurs from a pH of $3.1$ to a pH of $4.4$. For our case, we would end up with a $\pu{\frac 13 M}$ solution of $\ce{HCl}$, which, assuming complete dissociation and negligible contribution of $\text{H}^+$ from water, we end up with a pH of around $0.48$ which is well in the no-colour-change region of the pH values.

Regarding option 3, the 'more' just refers the water molecules formed as a result of neutralisation reaction, which are additional to the ones already present in either of the mixing solutions. Along with the formation of 'new' $\ce{NaCl}$ molecules (as in they did not exist bonded to one another before), water molecules are also formed. 

$\ce{NaOH + HCl -&gt; NaCl + H2O}$, i.e. table salt and water