From Gardener's Supply (

An Easy Way to Prevent
Damping Off Disease

Damping off fungus can ruin a flat of seedlings in short order. A thin layer of sand can help prevent problems.
Imagine: Your tiny seedlings are about two inches tall and growing beautifully when disaster strikes. The tiny plants simply fall over and die. Chances are they've succumbed to a fungal disease known as "damping off". The fungus enters a young seedling from the soil and the seedlings often die within days. The fungus can spread very quickly.

That's what happened to Roger Druitt of Evanston, Ill. And here's how he keeps it from happening again:

Roger plants his seeds in a sterile, soilless potting mix in an APS tray. He then covers the top of the soil with a thin layer of sand. Damping-off fungus enters soil from the surface and thrives in moist conditions. The combination of watering from the bottom with an APS and keeping the top of the soil dry and sterile (with sand), means the conditions are not very hospitable for the fungus. Roger also turns a fan on his seedlings to provide good air circulation and keep the foliage dry.