Hi, bigblue,
As far as how often, a lot will depend on the mix, the temperature, humidity level, cell size, etc. Bottom watering is good for many reasons but not always convenient, so you'll find proponents of both methods and I'm sure there are many techniques.
When planting, I make sure my mix is adequately moist and also use a spray bottle to keep the top from drying out down to the shallow level of the seed until they sprout. Then I bottom water exclusively at least until the plants are in very large containers. Damping off may be a problem if the top of the soil stays too damp for too long and there isn't enough air flow. I spritz with a diluted solution of hydrogen peroxide & water as soon as I see anything fuzzy, or if the surface looks just too wet and don't have problems even though I use plastic domes. If you use domes, prop one end open and use the lid to fan them a bit when checking on them from time to time.
You can use a second tray if you want to put the water directly in the first tray or you can use a smaller container to hold water and soak the containers in smaller batches and then drain them before putting them back in the larger tray- whatever works in your circumstances. The level of the water should be less than the height of the soil, but you'll soon learn how much is needed. When you're dunking, watch to see when the water first begins to show somewhere on the surface and pull the plants out and let drain thoroughly. You'll also begin to be able to tell when the plants need watering by the difference in the weight of the tray of seedlings before and after watering. You can also feel underneath the soil at bit but that's hard if you're using small cells. When the plants get larger you can also carefully pop them out of the cell to check them without the medium falling apart, but you'll probably have the hang of it by then.
Don't overwater but don't let them wilt.
Oops- I started this before Worth's post- great info there!
Best of luck-
kath