Why does a mid-wing aircraft have lower drag?
It's because interference drag (the vertical flow field forced to share space with the horizontal flow field) is minimized when the wing meets the fuselage at a 90 degree angle or more.
With a low wing airplane with dihedral, even if the sides of the fuselage are vertical, there is still less than a 90 degree angle due to the dihedral angle.  To mitigate the effect of an acute angle at the junction, traditionally a fillet fairing is installed to provide a curving transition between vertical and horizontal, reducing the intensity of the interference closest to the fuselage and minimizing flow separation.
Ideally however, it's better to have as close to a 90 degree intersection, as possible, or better yet greater than 90 degrees, and a mid wing makes this easy to do.  And if the fuselage cross section is circular, like the Grumman Wildcat, even better because the intersection is effectively a bit more than 90 degrees because the sides are curving away from the joint.  The mid wing has a number of packaging problems however (like the Wildcat's crazy landing gear, spar going right through the key cargo space on transport aircraft, etc).
The Corsair fighter killed two birds with one stone in going with the gull wing configuration; it lowered the wing at the landing gear attachment to allow a much shorter strut, and it maintained a 90 joint at the fuselage even though it was attached near the bottom.  The Corsair's gull wing achieved the benefit of a mid wing design aerodynamically, and a low wing design in its landing gear configuration.  Look at a Corsair and there is no fairing at the wing root you normally see on low wing fighters.  No fairing was necessary.
The Thorp T-18 homebuilt addressed the problem to avoid an acute angle at the wing to fuse junction, with a simple low wing, by starting the dihedral half way out on the panel, so that the mid section of the wing was flat and came out of the slab sided fuselage at 90 degrees (most T-18s use a very small fillet fairing at the back to reduce turbulence from flow separation aft of the thickest part of the wing, although some builders go with fancier ones). Thorp got the added benefit of a panel that could be built in two 4ft panels with the dihedral joint between them, allowing the wing to be skinned from a single trailing-edge-to-trailing-edge wrap of a 4 ft sheet of aluminum for each panel. Very easy to build.