How to repair crack in T1 11 siding

Although I agree with Johnnyz that it seems harmless. I would fill it with outdoor caulking. I'm not sure what your climate is but if water gets in and freezes then you have a bigger crack.

Consider using a paintable latex caulk. Apply a very small amount then work it into the length of the crack with a finger. Wipe off all excess with a damp rag or sponge, then paint. It is a good method requiring no sanding. If your ceiling is painted with flat (no gloss) paint, as most are, you will not be able to see it when you are done.