Both options are correct. The use of "and" or "or" in this context is a matter of personal preference. Both phrases convey the same meaning: the cities in Australia have low levels of air and water pollution.

Both. But remove got.

Both are valid, but #1 is better than #2.

Both are awkward and vague. You probably mean something like ‘Cities in Australia have low levels of air and water pollution.’ Or ‘Cities in Australia have clean air and water.’ You could use ‘got’ in speech when it’s smoother to say because of a contraction: ‘They’ve got clean air and water’ is a little bit easier to say than ‘They have clean air and water.’

1. The cities in China have little air and water pollution. 2. The cities in China experience minimal air and water pollution. 3. Chinese cities have low levels of air and water pollution.