Legend says that Croatian king Drzislav was kept in captivity by a Venetian Peter II. THe legend. Peter found out that Dzislav shared a same passion with him in chess, and then gave him the offer if Drzislav can beat him 3 times in a row, he would be free. Drzislav accepted, and he won three parties in a row, and was released. But that's the legend,
But it's generally believed that these colours represent the ancient White and Red regions of Croatia.
And if you're interested in 5 upper shield they represent from left to right the ancient arms of Croatia, Dubrovnik, Dalmatia, Istria, and Slavonia.