Oh it doesn't, AMD and Intel gave up on that awhile back. v8086 mode might... but I'd guess it has quite a bit of errata. Everything else has most certainly changed. CPUs don't support the A20 gate for example. Nor do they truly support real mode (they boot in 'unreal mode' now). If you want a 386 compatible you're looking at ALi or DM&P CPUs that are basically Pentium/486/386 clones.

I'd argue the break started with the Pentium Pro, at that point things shifted architecturally.