Your lights should be 1" away from the dome lid with your flouros. Really, only one inch!
To answer your actual question though, on when to transfer to a larger rockwool cube......... When you see ROOTS coming from the bottom of your current rockwool cubes. Once they have a couple inch long roots coming out the bottom, put them in your next rockwool cube that you DID pre-soak for 24 hours first in pH balanced water.
Then feed them 1/3 of your "Week 1 Veg" nutrients for a few days by hand -- only water when the cubes appear to be about 1/3 to 1/2 dry. (If the bottoms are still wet and "green" rather than "yellow green", wait longer to water them by a day still).
Hope this helps!