FAR definition of "Incident":

Incident means an occurrence other than an accident, associated with the operation of an aircraft, which affects or could affect the safety of operations.

So yeah, an altitude pilot deviation could be considered an incident.

I'd just go ahead and disclose it, it's minor. It will give you something relatively harmless to talk about, what you learned and how you'll avoid it happening in the future. They'll also appreciate your honesty, since as you say they probably weren't going to find out anyway.

Now is the question "Can I get away with lying about it?" Probably, but not for sure. Interviewers (at the better employers) are trained to spot indications of dishonesty. How good of an actor are you? Do you know how to lie professionally (the CIA would teach that, if you had worked for them. Or undercover law enforcement). Keep in mind they don't have to *prove* you're lying, just have a suspicion and they'll move on to the next candidate. Or maybe they won't even ask about it since you checked No on the application. But I've always been asked some catch-all question to the effect of "is there anything you'd like to disclose at this time?"