I usually transplant after the third true leaves have been produced as the roots have not penetrated far into the medium yet and the seedlings are easily pricked out and transplant with minimal shock.
Regarding inhibitory enzymes, some plants produce enzymes that enter the substrate that actively discourage other plants, even of the same species, from growing in close proximity. This is especially true of Drosophyllum, and could also be the case with various Droserae like indica. In any case, transplanting early on reduces competition among the seedlings.
Cotyledons are the "seed leaves" which are already present in the seed, along with the endosperm which nourishes the developing cotyledons. These are usually round, and lack any distinctive form found in the true leaves. They emerge first from the seed, and are often larger in surface than the true leaves to provide more surface for photosynthesis giving the developing seedling the energy needed to grow the true leaves.