I always thought it was purely a hardware limitation, but reading up on it I found it's actually just "virtual 8086 mode" that was dropped, 16-bit protected mode is still available even when running the CPU in "long mode".

So it rules out DOS apps, but 16bit Win 3.x apps should still run. But it's probably a compatibility minefield, and even MS decided it wasn't important (iirc the only thing they kept around was support for 16-bit app installers, but by internally swapping them out with 32-bit versions when run, since it was apparently common for 32-bit 9x apps to still use 16-bit installers so they could show a proper error message when run under Win 3.x)

From what I've seen if an online store provides a 16 bit classic without a reimplementation, it's bundled with dosbox.

Of course, I'm pretty much blanking on any classic Win16 titles of note. As far as I recall the significant games just kept being DOS games with at most launch from icon. I suppose original Myst because QuickTime, but they released a Win32 build. But this 16 bit stuff was a speculation, this is about the 32 bit stuff that isn't reasonably accommodated without a 32 bit runtime and certain bits being at odds with Flatpak isolation architecture.