Well who said that you can't evolve into yourself =p
As for the attack, it definitely confuses me... you really have to be clear, like the situation with the bench... I'll rather word the attack something like...
"If there is 1 munch counter on May's Munchlax, this attack deals 10 damage. For every additional munch counters attached on May's Munchlax, double the damage dealed by this attack before any calculations. When you have more than 4 munch counters on May's Munchlax, this attack does nothing. When May's Munchlax is switched on to the bench, do not discard any special counters attached to May's Munchlax. After damage calculations, put a munch counter on May's Munchlax."
It's so long and lengthy, yes I know, but how else are you suppose to explain it? I'm not a card maker (obviously) but I do try my best to put it into the TCG wording.