In a combination reaction, two or more substances combine to form a single product. When Calcium oxide reacts with water, it produces slaked lime (Calcium hydroxide) as a single product, which involves the combining of Calcium oxide and water. Therefore, it is a combination reaction described in option 1.

Option 2 is a decomposition reaction, where a single reactant breaks down into two or more products. This is not happening here as we have two reactants combining, not decomposing.

Option 3 is an oxidation reaction, involving the addition of oxygen or the removal of hydrogen. But in this case, oxygen doesn`t get added nor hydrogen removed.

Option 4 is an addition reaction, where two or more molecules combine to form a larger one. However, this term is specifically used in the context of organic chemistry.

So, the process where Calcium oxide reacts with water to produce slaked lime is best described as a combination reaction.