What could be the reason for it? Is it a "you" -> "u" SMS lingo type of thing?

I think it's more of a "lol" -> "lawl" or "btw" -> "btdubz" type of thing.

pretty close, except 神马 actually means Godly Horse, 神么actually means God? Not really funny when I explain it out, it's the typo and pronunciation variance that's kinda funny.

No, you are wrong, not even close. "神马／神么" are just variants of "什么"（"what" in English). Young people use these Internet-ish words just for fun.

Literally, "神" doesn't mean "God", "God" in Chinese is "上帝".

I'm a native Chinese.

I am also native Chinese. In Hong Kong, "神" means God.

Well, since most audience here are non-Chinese speaking people, how about let's be clear. So in this context, "神马／神么" are Mandarin words, and I believe that people in HK speak Cantonese and don't usually use these Mandarin words.

On the other hand, IMHO, just IMHO, "God" being translated into Chinese(Cantonese) as "神" is not thoughtful as it introduces confusion.

no, hard to explain for me in plain English, inportb's explanation below should be close.