AFAIK it was a quick and dirty stopgap processor to drop in the 8080-shaped hole until they could finish the iapx432. Intel wanted 8080 code to be almost auto-translatable to 8086 code and give their customers a way out of the 8bit 64K world. So they designed instructions and a memory layout to make this possible, at the cost of orthogonality.
Then IBM hacked together the quick and dirty PC based on the quick and dirty processor, and somehow one of the worst possible designs became the industry standard.
Thinking of it, the 80386 might be Intel coming to terms with the fact that everyone was stuck with this ugly design, and making the best of it. See also the 80186, a CPU incompatible with the PC. Maybe a sign Intel didn't believed in the future of the PC ?