Congrats, you have live sphagnum!
Is it too early to do cuttings?
Wait for it to get a little... overgrown. You will soon have more than you could ever need, I did the same and have about a surplus of a gallon this year!
Just from that one tiny piece, I'll end up with bunches of it eventually? How does it propagate? It'll seed or what?
It will naturally colonize the surface by branching... you can cut it, but in my experience, cutting small into smaller delays the growth of both. In a year, you'd be amazed at what it's done.
Veronis,
If you wanna grow your own sphagnum faster and in more quantity get hold of a small bale of blond LFS labeled "Orchid Moss" from Lowes ($5) and one of those Jiffy Seedling Greenhouse trays with the clear lids ($3).
Take handfuls of dry LFS and grind them together to make a shredded dust, it seems to cause moss germination faster. My belief is that this releases spores as well as generates more surface area for them to germinate on. Grind up enough handfuls to fill the Jiffy tray to 1" deep or so. Wear a mask or tie a shirt over your face like a old-time bandit when you do this cos you don't wanna breathe the LFS dust it's very bad and can cause a fungal infection in your lungs.
Soak the ground up moss well with R/O water and then squeeze most of the water out of it and put it in the tray making a roughly even layer of moist ground up moss. Mist it heavily don't water log it just get the surface glistening as if it was lightly rained on and put the lid on it. Let the tray get indirect sun light, terrarium light or at least cool eastern morning light and shade the rest of the day and in about 90 days you should begin to have your own field of green which you can harvest from and replace with another bit of ground moss to keep the culture growing. Mist it every few days or whenever it looks to be getting dry. The brighter the light it gets the faster it dries out. Western/afternoon sun seems to burn germinating LFS even if it's under a humidity dome. I never have good luck growing it on my patio.
Chilean. i use the same stuffYeah, the Lowes Orchid Moss is supposedly from New Zealand.