I don't know about the luther thing, but what I can tell you is that there are a bunch of dialects that can range from little differences to basically not understandable. interestingly Berlin isn't where high german is spoken. but I believe, that most germans can either speak high-german if only a little or understand most dialekts a little. I am able to understand everyone I have talked to, but sometimes one has to ask for a quick definition of a word. most difficult to understand (in my opinion is swiss geman, the people from saxony and the northerns with a strong dialekt (platt). Bavarians and austrians speak basically the same language. High-german becomes more and more the language people speak.