it looks like white fuzz or hair on the opening of the net on my peat plugs. its basically right over the spot where my seed is planted. ive had them under a cfl for 4 days with a humidity dome on them. it came with the kit so i assumed you use it. 2 seedlings sprouted today and thats when i noticed the fuzz. ive tried googling it and get mixed answers. im guessing its a fungi that grows on moist soil?
Sounds like mould yeah. Maybe a little too humid, not enough fresh air, you need to remove the cover and le them breathe a little every day. It should be easily removed by a gentle finger brushing it off. Hopefully it wont come back if you don't let the plug stay damp for too long at a time.