I don't see much thatch, but I can always tell better by feel. Thatch has a rubbery bounce back to it when squeezed, where soil tends to stay compressed. As far as the water issue, it looks to me like the bottom of your plug might be the start of a transition to a sandy layer and therefore just doesn't have the holding capacity that the rest of the plug does. I would hold off on watering until you start to see that dry look-- blue tinge, slight wilt.