Nitpick: calling this an "x86" compiler is a modernism. There were, indeed, multiple successor chips to the 8086 in the market. But gcc supported only one of them. This is a 386 compiler, not an x86 compiler.
However, there is (at least one) fork which adds 16-bit code support, see https://github.com/tkchia/gcc-ia16
I don't think the GCC maintainers have ever or will ever want to support 16-bit x86, because it is so limited, and adds a lot of messy corner cases, and nowadays is really only of hobbyist/retrocomputing interest.
Maybe there is some 16-bit x86 embedded system still being maintained–there were military spec versions of the 8086, and possibly some weapons system, aircraft, satellite, etc, still in use contains one. But I doubt they'd have any interest in adopting a 16-bit GCC – they'd already have some proprietary compiler they'd been using for decades, switching now would add a lot of risk, very late in the life of a legacy system, for no tangible benefit
I have no idea what to use it for, but hey.
https://www.youtube.com/watch?v=zBkNBP00wJE
Followed by,
"C++20 For The Commodore 64"
IIRC, I started hearing "x86" once the 486 came out in 1989.
If it outputs code for a single cpu from 8086 or later in that family, any single one of them, then it is "an x86 compiler".
It also doesn't matter what they would have called it at the time. When the 8086 was new, there was not yet a family of *86 model numbers, so no one would call anything an x86 anything. But that doesn't change the fact that now, when the speaker you are incorrectly trying to correct spoke, there is a set with name "x86" and the 8086 is in it.
The 8086 is an x86 cpu, and gcc 1.27 is an x86 compiler.
If you didn't think that's how those words should be interpreted, well now you are better informed, and will hopefully confuse fewer people in your future communications, and wind up in fewer arguments like this one.