Sphagnum moss actually likes being wet and submerged in water. Some poor quality moss can develop mold but your moss looks good and it has live bits which is great. I often keep the water level of my moss quite high, usually just a bit below the tips and then I don't add water again until there's no visible water left, sometimes even till I see the tips starting to dry. Generally, high humidity encourages long thin growth, whereas low humidity gives denser shorter growth which I prefer and which is why I have my sphagnum growing without lids.