The method of waste management that uses microorganisms to eliminate or neutralise contaminants from polluted sites is known as :

 Bioremediation 

The correct answer is Option (1) - Bioremediation

In order to remove or neutralise pollutants from a contaminated location, bioremediation is a waste management approach. To convert harmful compounds into less toxic or non-toxic ones, it makes use of naturally occurring microbes.

Bioremediation is a process of detoxifying or degrading contaminants present in the soil, wastewater, or industrial sludge by biological means. Microorganisms (bacteria, fungi, etc.) can take part in this process, although plant-assisted bioremediation is often termed as phytoremediation