I'm not a chemist, or any other type of scientist, but I'll give it a shot. Yes, a water molecule is smaller than 10 microns, but so is a gas molecule. A water molecule measures 0.278 nm and one micron is 1000 nm (nanometers) in size.
Filters/separators work based on the specific gravity of water being heavier than gas, and the surface tension of water, being almost 4 times greater than that of gas. In the separator the lower surface tension of the gas allows it to flow through the filter a lot easier. The higher surface tension of water prevents it from going through as easily. The water that is blocked sinks to the bottom since it's heavier.
Water will pass through a 10 micron fuel filter, just as it passes through a 10 micron filter in your house. When the water level in the fuel filter gets high enough to where the the pressure from the fuel pump overcomes the surface tension of the water, it will pass through the filter.