The Narmada Water Dispute Tribunal was formed to settle the issue of sharing water from the Narmada river among the states of Gujarat, Maharashtra, Rajasthan, and Madhya Pradesh. This tribunal was established to resolve conflicts and ensure equitable distribution of water resources among these states.

Option 1, Gujarat and Rajasthan, is incorrect because the tribunal was not exclusively for these two states but also included Maharashtra and Madhya Pradesh.

Option 2, Gujarat and Maharashtra, is incorrect because the tribunal was not limited to these two states but also included Rajasthan and Madhya Pradesh.

Option 4, Gujarat and Daman and Diu, is incorrect because the tribunal did not involve Daman and Diu, but rather the four states mentioned above.

Therefore, option 3, Gujarat, Maharashtra, Rajasthan, and Madhya Pradesh, is the correct answer for the states involved in the Narmada Water Dispute Tribunal.