At the dawn of the gamma--ray burst (GRB) afterglow era, a Cepheid-like correlation was discovered between the time variability $V$ and the isotropic-equivalent peak luminosity $L_ iso $ of the prompt emission of about a dozen long GRBs with measured redshift available at that time. Soon afterwards, the correlation was confirmed in a sample of about 30 GRBs, even though it was affected by significant scatter. Unlike the minimum variability timescale (MVT), $V$ measures the relative power of short-to-intermediate timescales. We aim to test the correlation using about 200 long GRBs with spectroscopically measured redshift, detected by Swift Fermi and Konus/ WIND for which both observables can be accurately estimated. The variability for all selected GRBs was calculated according to the original definition using the 64 ms background-subtracted light curves of Swift /BAT ( Fermi /GBM) in the 15--150 (8--900) keV energy passband. Peak luminosities were either taken from the literature or derived from modelling broad-band spectra acquired with either Konus/ WIND or Fermi /GBM. The statistical significance of the correlation has weakened to $ 2$<!PCT!>, mostly due to the appearance of a number of smooth and luminous GRBs that are characterised by a relatively small $V$. At odds with most long GRBs, three out of four long-duration merger candidates have high $V$ and low iso The luminosity is more tightly connected with shortest timescales measured by MVT than the short to intermediate timescales measured by $V$. We discuss the implications for internal dissipation models and the role of the $e^ pm $ photosphere. We identified a few smooth GRBs with a single broad pulse and low $V$ that might have an external shock origin, in contrast with most GRBs. The combination of high variability $(V 0.1)$, low luminosity iso $ erg s$^ $, and short MVT ($ 0.1$ s) could be a good indicator for a compact binary merger origin.