Chamomile is supposed to be a natural antifungal. I think you could water either way, though I water my seedlings with an adjustable spray bottle. You can find chamomile tea in most grocery stores(ie, celestial seasonings).

I emptied a tea bag into my seed starting starting mix one year as an experiment instead of using the tea(as a damping-off preventative)to water my seedlings. I keep the mix in a large lidded tupperware bowl and when I took the lid off after some days, I had chamomile seedlings all over the mix. The tea is made from the flowers, which would contain the seeds, so sprinkling the tea where you want to grow it should work, IMO.

The leaves of chamomile are not acceptable for tea - very bitter, and for some reason I believe I saw somewhere that it has some toxic qualities. German chamomile is an annual, and it grows well from seed. Meaning, considering all those flowers that don't get harvested, it reseeds itself with no problems at all. I use my little herb scissors to harvest chamomile, snipping off the flowers when at their peak. I like them best included in tea fresh, but I also dry some for use later.

I've tried just raking the flowers from plant but it leaves them looking raggedy with flowers stems poking out every which way. Rather I use my pruners and cut each flowering stem back to a set of leaves or flower buds below..takes a lota time tho. I have a lotta 2 1/2' self-sown plants this year so am only harvesting flowers from a few. The other's I prune back hard to about 1' and they still will produce new blooms but just not as quickly for removal of new ready to bloom buds. As you know the foliage can look great all on it own! Today will be my 3rd harvest this year already. Vera