The 8086 microprocessor launched by Intel in 1978 is a 16-bit microprocessor with a 16-bit data bus and 20-bit address bus, allowing it to access up to 1MB of memory. It has two main units - the Bus Interface Unit which handles read/write operations, and the Execution Unit which performs decoding and execution. The 8086 uses memory segmentation to divide the 1MB memory into 64KB segments to overcome the limitation of 16-bit registers. It can have four segments active at a time - code, stack, data, and extra segments.