Answer: Thinning seedlings is an important part of growing plants from seeds. If they're overcrowded, seedlings will compete for light and moisture, making them spindly and weak. Thinning gives them enough elbow room to grow stout and sturdy. Seedlings started indoors in "6-packs" should be thinned to one plant per cell. Seedlings in flats should be thinned to at least an inch apart. You can thin by cutting the stems of overcrowded seedlings right at the soil line, saving the healthiest looking ones and snipping off adjacent plants.
Or, you can prick them out of the soil and transplant to another tray or pot--but you run the risk of damaging the roots. If you transplant your thinnings, handle the seedlings by the leaves rather than by the stems. If you bruise the stem the plant will die. If you bruise the leaves, it will just encourage development of additional leaves.
Outdoors, seedlings should be thinned according the the directions on the seed packet. (Remember, you can eat the thinnings of spinach, beets, and carrots -- consider them gourmet baby vegetables!)
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