Do not underestimate those old computers. When you remove audio, visual, and textual data from your programs, remove all the code for handling those and slinging them about and processing them, when you remove the textual file formats and replace them with hand-optimized binary, when you give up on any form of structured modern programming and just hand-compile custom assembler, when your opcodes aren't 64-bits wide, and so on and so on, you can get a lot done in 128KB of code.

Obligatory (but illustrative of my point): http://www.pbm.com/~lindahl/mel.html