In the 8086 microprocessor, the physical address is calculated by shifting the segment address 4 bits to the left, which effectively multiplies it by 16. This operation aligns the segment address to the correct boundary in memory, allowing for a proper offset calculation. The combined segment and offset addresses then yield a 20-bit physical address, which can access a larger memory range than the 16-bit addresses used for segments and offsets individually. This addressing scheme enables the 8086 to utilize up to 1 MB of memory.
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