When the roots have developed well relative to the pot size.
usually when the canopy is as wide as the pot itself. When you do it, the roots should hold the medium together. Make sure to do it when it isn't bone-dry and that helps too. if the rootball crumbles, it's user-error. Adjust and avoid.
Take time to loosen it from the side of the pot. should slide out with a little gravity and a gentle tug. The molded plastic you can just kinda push/deform slightly and it seperates and with cloth you sometimes need to take a curved-blade trowel to the sides as some roots can grow into the fabric and make it difficult to slide out. if you can press from undernath to push the plug out a bit, that helps a great deal. not all pots allow you to do so. loosening from sides and inverting (gravity) is usually enough with a gentle pull.
That picture is too soon. The other factor you can use to help is the time between irrigations. When it is drinking fast enough to warrant more medium, you know it won't sit there wet for 9-10 days in its new pot... stagnating. This is primarily how i do it now. When my seedlings are approaching 1 day between irrigations in little 2.5" pots, i bump up to my 1-gallons. They then take several days to drink the water down... but not so long it's risking weird microbial growth.
size of pot is relevant to using that method... i don't wait for near-1-day irrigations when going to next stage. compared to the 2.5" pot, the 1 gallon plants have a good root system that can more effectively colonize the next size up, when the time comes.