i normally put seedlings so they are only just under the surface.
also, the soil should not be water-logged, small seedlings wont use a lot of water, so as long as the depth of soil where the seeds are dosent get totally dried out, you are ok.

you have to keep a balance between rotting them from to much water, and drying out. the drainage of the soil, light and temp will dictate how much and how often you water, which will vary...its somthing you will get a feel for quite quickly.

good luck!