At Vector Fabrics, we are using OCaml extensively.
Having recognised the advantages that functional programming could bring to our engineering activities (we are mainly constructing software tools for analysing C and C++ programs), we considered both Haskell and OCaml as languages to use. In the end, we decided to go for OCaml, mostly because its execution model is simpler (eager evaluation vs. Haskell's lazy evaluation) and therefore reasoning about the behaviour of programs is somewhat simpler for programmers who do not necessarily have a background in functional programming (we were especially concerned with reasoning about the space behaviour of programs, with is, sometimes even for experts, quite challenging in Haskell).
OCaml allowing you to selectively "escape" to imperative and even object-oriented programming is something that sometimes comes in handy but not something we recommend to our programmers as a good practice in everyday programming. Our rationale: once you adopt a functional programming language, you better use it to do functional programming in, otherwise you can easily end up writing imperative and object-oriented programs in (for that purposes) clumsy syntax. After all, if you're problem domain is better served with object-oriented programming, then you're better off selecting a language like Java that is far better suited for that.
Answering your questions:
- Does Ocaml reduce lines of code compared to say Java? Yes, but only if indeed adopt a "functional style" of programming. Also, be careful: functional programs can be beautifully concise, but sometimes notation can obscure the inherent complexity of algorithms.
- What editors do you use? We mainly use general-purpose editors like emacs and vim.
- I have see that there are many Ocaml library implementations- Batteries,Core etc.In the beginning can only Batteries suffice? Batteries makes for a nice and arguably powerful-enough standard library (but so does Core). Depending on your problem domain, you may need to extend the standard libraries with your own utility libraries.
- Do you use Ocaml Core(by Jane Street)? How different is it compared to standard one? We don't use it, but see, e.g., What are the pros and cons of Batteries and Core?.
Note that these questions have many possible answers and that I have answered them to a large extent exclusively from the Vector Fabrics perspective. In fact, your question may be a bit too broad for Stack Overflow.