If anyone actually has a serious need to use ancient 16 bit software, emulators like 86Box work very well. Software that old doesn’t really need performance faster than, say, a Pentium 90, which 86Box has no trouble achieving on my M1 (ARM) MacBook.
You can also use winevdm[1] on modern 64 bit Windows operating systems. I have this in production use for a niche case where someone can’t give up a particular 16 bit app, and I didn’t want to tangle with a VM for them.
The technical details of making sure a modern CPU still functions exactly like an 80386, which in turn made sure it functioned like an 80286, when you fire up a 16 bit task on, say, 32-bit Windows 10 (or 64-bit with something like winevdm[1]) sound like a nightmare for a microcode engineer or QA tester.