I think the top of the colander has to be some critical distance higher than the overflow hole, to maintain enough air space for aeration despite the potting mix lower than the overflow hole being submerged much of the time.
Step Two, July 15th, includes these:
>> "Mark a spot on the outside of the bucket approximately 1" below the overturned bottom of the colander, and drill a hole through the bucket (I use a 5/8" bit). This will be your overflow hole."
...
>>
"Note: There should be approximately 1" of airspace between the top of your water in the reservoir, and your soilbed on top of the colander. This space keeps the majority of your potting mix from being in constant contact with the water, and becoming anaerobic."
http://garden.org/thread/view_...
It might also be important that the plants can "drink up" the water fast enough to create a deeper/taller air space fairly soon after watering.
When planting seedling trays (not eContainers) I think of that as being like a frat guy in a telephone booth being frequently re-filled with beer. The frat guy won't drown as long as he can drink beer faster than it is poured into the booth.
The seedlings' roots won't drown if they can pull water out of the seedling tray faster than I can over-water. (Since of course they
can't do that, I have to use fast-draining seedling mix.)