The 8086 microprocessor is a 16-bit processor released by Intel in 1978. It has a 16-bit external data bus and a 20-bit address bus. The 8086 uses segmented memory architecture and can access 1MB of physical memory using segment registers. It has a separate Bus Interface Unit and Execution Unit. The BIU handles fetching instructions and data from memory using segment registers and the IP register. The EU decodes and executes instructions using general purpose registers like AX, BX, CX, DX and flag register.