There was some point when it wasn't necessarily cheap: when chips had transistor counts in the hundreds of thousands or single digit millions. But current chips

There was some point when it wasn't necessarily cheap: when chips had transistor counts in the hundreds of thousands or single digit millions. But current chips generally have billions of transistors (or at least high triple digit millions). There are just a huge number of gates to go around, and since the complexity of 16-bit support remains largely constant it becomes an ever-shrinking piece of the die. These backwards compatibility modes don't need to be super fast (after all, current chips are perhaps 1000x the speed of the old 16-bit chips), so they don't need to get a ton of gates thrown at them: they just need to work. If there were no backwards compatibility concerns, I'm sure Intel and AMD could like to get rid of this stuff: not so much because it uses a lot of space, but just because the design and validation effort to make sure these old ISAs keep working is probably considerable. It's the same kind of situation with all the old effectively obsolete instructions: supporting them takes minimal space, especially when they are allowed to be slow. The encoding space they take up is more of a problem - but that can't be changed now...