> However, you cannot do virtual 8086 mode without switching back to 32-bit mode, so you cannot run real mode MS-DOS programs.

You can switch to 32-bit mode, then enter vm86, and then switch back to long mode once you are done. There was a kernel module flying around that would do this and make syscalls such as vm86plus work in amd64 Linux.

But yes, basically, it's a political more than technical choice to drop support for 16-bit programs on 64-bit Windows; same for >4GiB RAM support in 32-bit Windows.