Theres no automatic sorting in these layers, in fact at first I thought it was sorting on the ObjectID in the Properties window rather than the Object's Name in the Layer window.

If you wish to sort object in a certain way (of course for your own use) depending on what you changed the object's name to rather than Lot 1, Lot 2, Lots 3. Say you have changed that to 3 Newbie Road, 10 Prospect Lane and 1 Newbie Road.

In the Layers Window, It will look like:

Layer_1
-> References
--> 3 Newbie Road
--> 10 Prospect Lane
--> 1 Newbie Road
-> Game Objects

You could move these around by dragging and dropping it on the References entry. Yes, when you have loads of entries it will take some time, but it does help. The thing to remember is the one you want to be at the top must be dropped first and it will go to the bottom of the layer list, then the second, third, etc... In my example, 1 Newbie Road is already at the bottom, so no need to drag that, first to be dragged then would be 3 Newbie Road, then 10 Prospect Lane.

Another thing to keep in mind, is to help yourself but creating layers for different groupings. At the moment I have layers for trees, rocks, waves, but it might also be a good idea to create a layer for different streets, so Newbie Road would have it's own layer and Prospect Lane would have it's own layer. Makes using the sorting technique I described above a tad easier.

The manual says its good to make layers for each type of tree. They are then considered one object and load faster. I don't know if objects should be in their own layer. I have been creating layers with types of objects so all bridges in one, all rocks, all water features, etc.