I take a slightly different view.
I have lids on my 1/4 sized propagator trays. I used to use clear plastic bags before I had a propagator.
At germination I open the little vent fully. I leave the lids on for at least two more days (depending on how the seedlings are doing). I find that many that have germinated have not got their roots down properly, so I want to keep them humid and not stress them (until they have a strong root).
However, the lid is stealing some light strength - on a windowsill the light is only from one direction, has come through both panes of double glazing, and the clear plastic seed-tray lid ... so I am very conscious of the left and stem growth of the seedlings. This year has been particularly bad as light levels have been lower than normal, and my seedlings are noticeably more leggy than normal. I put a strip-light above then on for 8 hours during the night to try to help them a bit. If your light is good (e.g. in a greenhouse) I would be inclined to leave the lids for a couple of day to provide humid conditions for a bit longer.
Damping Off is a threat, but I don't sow my seed "forest thick" and I think that helps reduce the risk. I also only water seedlings with tap water - which doesn't have the muck off the roof that rain water has. I also only water from the bottom (put seed-tray in a bowl of tepid water for 10 minutes, then let drain. I don't water at all until germinated (the lid prevents evaporation), and thereafter I don't "dunk" more than once a week at this time of the year