[sarbaz]

The true reason is that intel didn't support coexistence of Virtual 8086 mode with 64-bit mode. So adding 16 bit app support would require loads of work to get it working as part of a 64 bit OS.

Regular protected mode code has built in support that allows easily running 16 bit apps, so maintaining compatibility was a no-brainer. The moment the trade-off changed, Microsoft decided to drop support for 16 bit apps.

Personally, I don't mind that very much, because dosbox is a great product that bridges the gap perfectly.

[LocalH]

Really, all they'd have to do is drop a v86 emulator into NTVDM. There actually exist a handful of projects attempting to bring emulated 16-bit support to 64-bit Windows, including one that's based on that leaked Windows source code (which apparently had a copy of the CPU emulator they used on other platforms back when there were actually non-Intel builds of Windows).