The 8086 microprocessor is Intel's first 16-bit microprocessor. It has a 16-bit data bus and 20-bit address bus, allowing it to access up to 1MB of memory. The 8086 uses segmented memory architecture, dividing memory into segments of up to 64KB addressed through segment registers. It has on-chip registers for code, data, stack, and one extra segment. The 8086's execution and bus interface units operate in parallel via an instruction queue, enabling pipelined processing.