ETFs come with various underlying assets, like equities, commodities, bonds and currencies.
ETFs’ performances are based on the underlying assets and benchmark, and the function of the fund manager is to track as closely to the underlying assets and benchmark as possible, thereby reducing the tracking error.
Liquidity is provided by the market-maker assigned by the issuers and in addition, the market participants add on to that amount of liquidity.
Citing an example in Hong Kong, 2823HK has an average daily traded volume of 60 - 100 million shares per day, with certain intra-day change in price of a few percent depending on the underlying.
Therefore, ETF is an investment tool that day / trend traders can use for their short-term trading needs with the liquidity and volatility it presents.