Like AS I too sometimes use flats for starting seeds. Here is a picture of last years Pepper seedlings.
Yes, they're crowded and I did transplant them to individual '4-packs' soon after this was taken. This container is a Styrofoam mushroom package recycled from the grocery.
Another source of small flats is the plastic trays some retailers package meat in these days. They remind me of bonsai pots and they are useful for a lot of things.