These days I would say the best method is to use a 3 terminal hall-effect electronic switch and a permanent magnet. These are very small and easy to hide into the box and easy to adjust the magnet spacing to make how high the lid has to move before indication. Very simple to interface with the arduino, just enable the internal pull-up for an input pin and wire it to the sensor's output pin, then just wire ground and +5vdc to the sensor. 95 cents at SparkFun: Hall-Effect Sensor - US1881 (Latching) - COM-09312 - SparkFun Electronics
How could anything be better or easier?
Lefty