You should water near the new sprouts in a circle but also do another circle of water about an inch farther outward. You need to get enough water toward the sides and bottoms for the roots to follow the water to grow outward and downward. Some people might use a .5 liter water bottle, I have a very small watering can with a long metal spout that I use for seedlings, it doesn't disrupt the soil. I didn't water daily. If your soil mix isn't totally 'mixed' I'd pull out those chunks of sticks or anything not decomposed, be better to use Miracle Gro organics for the seedlings than that (I know you had other plans, stuff happens). Personally, I'd get these healthy and growing larger before transplanting. Yes, you can remove what you can and add more soil, but don't have foliage touching the soil. As the plant grows taller you will lose a few leaves, makes room for more good soil. Those look like they're growing in a desert, no offense. In pictures here they all look like they need a through soak until a little run off. If you have drainage holes and some air circulation I wouldn't worry about getting them fully watered, just be gentle.