You've already shot past two major obstacles (overwatering and untangling seedlings). The fact that you have so many survivors means that you never fell prey to overwatering. You managed to untangle hundreds of seedlings, and trying to dot hat STILL give me the heebie-jeebies.
Even experienced seed-starters start too many seeds. It is really hard to kill any of them, but think of it as "natural selection". It's smart to start 25-75 inexpensive seeds so that you can keep the 5 best, give away the next 10 or 20, and sacrifice the worst half to two thirds. Selection means that some inexpensive seeds fail the test, and that's just smart gardening.
If you start just 2-3 seeds in each cell, it's bearable to chop 1-2 down if they all germinate. And you just KNOW that, as soon as you start planting 3 seeds instead of 300 in each cell, that germination will drop from 95% down to 20% - seeds are wickedly eager to mess with our heads, I swear!
I use this to cut the extras, but any small scissor works OK. Pulling them out is likely to break the roots of the ones you want to keep. Better to just chop them off at ground level.
(Edited to add the photo.)
"Winter-sowing" enthusiasts have another philosophy that seems to work Ok with flowers. They start way too many seeds in something the size of a gallon milk jug. Then let them grow until the seedlings look like a Chia Pet. When they go to plant them out in the ground, they cut or tear the mass of seedlings into "chunks" - say 4-6 chunks per milk bottle. Then they plant that entire darn Hunk o' Seedlings (called HoS) into the flower garden. They say "the sturdiest seedlings will survive", and their gardens do show dense, healthy growth of flowers packed thickly together.
However, every vegetable I'm familiar with needs room to produce a big, healthy plant. You HAVE TO THIN vegetable seedlings. It's easier to thin them the smaller you start.
If you have some cells with two big, healthy seedlings,
and if you have a use for that many plants , you can push the two seedlings out of one cell, untangle those two, return one to the cell, and plant the other in another cell of the same small size, or "promote" one to a 3" pot or 4" pot.
In the interests of enabling and encouraging O. Seed D., here are some places to buy seed-starting "insert trays" (the flimsy, tearable "six-pack cells", plug trays, propagation trays, small pots, etc etc etc.
Greenhouse Mega Store:
Overview:
http://www.greenhousemegastore...
Trays & flats of all kinds - including 10-packs
http://www.greenhousemegastore...
Insert trays incl. DEEP inserts
http://www.greenhousemegastore...
plug tray 10-packs:
http://www.greenhousemegastore...
small pots for seedlings:
http://www.greenhousemegastore...
Growers Solution
Containers, etc:
http://www.growerssolution.com...
Insert Trays: 6-packs etc (flimsy & tearable but convenient)
http://www.growerssolution.com...
Sturdy plug & propagation trays with small cells:
http://www.growerssolution.com...
