What does the 86 in "x86" refer to?

Actually, the two answers above are not completely correct.

Intel came out with the 16 bit 8086 CPU in the late 70's and then introducted a modified version which was the 8088. The 8088 was a 16 bit CPU, but it had half of the data output pins, which made it possible to integrate the CPU with cheaper 8 bit hardware. The CPU would internally work with 16 bit data, but when it reads or writes to memory, it must do so 8 bits at a time (i.e. 2 reads or writes to memory). The IBM PC was the first personal computer to use the 8088 and the expansion bus (for plug-in cards) on the motherboard was designed for 8 bit peripheral cards.

Intel went on to create the 80286, 80186 (modified 80286), a few variations of the 80386, and several variations of the 80486. The 80286 was used in the IBM AT computer and I think Compaq was the first PC computer maker to use the 80386 back in 1985. You can find more information about these CPUs on Wikipedia, but it should be noted that all of the CPUs were backwards compatible with the 8086. At around the time when computer makers started using 80486s, there were other companies besides AMD (e.g. Cyrix) who came out with their own compatible CPUs. However, their use of the 386 and 486 numbers made it confusing for consumers to know what they were really getting. (Look up 'Cyrix Cx486SLC' on Wikipedia.) Intel tried to distinguish themselves from the other companites by sticking an 'i' before the number (e.g. i486). Before and after the Pentium came out, people referred to the 8086 family of processors as 'x86.'

After the 80486, Intel went with the 'Pentium' name because it was not possible to trademark a number. To this day, the 32 and 64 bit Pentium CPUs are still internally backwards compatible with the 8086 (CPU instructions, memory addressing, and memory layout). Nowadays, Intel refers to the 16 and 32 bit x86 CPUs, as well as the 32 bit Pentium CPUs as 'IA-32.' 64 bit Pentium CPUs are designated 'Intel 64.'

x86 means a 32-bit platform.

As the x86 term became common after the introduction of the 80386, it usually implies a binary compatibility with the 32-bit instruction set of the 80386. This may sometimes be emphasized as x86-32 to distinguish it either from the original 16-bit x86-16 or from the newer 64-bit x86-64 (also called x64). Although most x86-processors used in new personal computers and servers have 64-bit capabilities, to avoid compatibility problems with older computers or systems, the term x86-64 is often used to denote 64-bit software, with the term x86 implying only 32-bit.

-Elian

It is a throwback to the early 32 bit processors that were numbered 80286, 80386 and 80486. Today, x86 just means 32 bit system. x64 means 64 bit system.