Non Schengen EU resident travelling to Schengen Countries

My friends are third-country nationals, holders of Croatian EU residence permit, can they travel to Schengen countries without a visa?

And, after 5 years when they qualify for long term EU residence permits, what is the process of living in another EU state, with no intention to work or study -- retire? And presumably, the status would just be normal residents (as opposed to long term EU residents) of the second member state again?