Re: do we REALLY need to be able to run 16-bit applications in this day and age?
In a number of cases - yes. Companies have programs written for the DOS era that do the job perfectly, and have been for donkey's years. Replacing them would bring a whole lot of cost, risk and business interruptions so if there is not a good reason to change them, they don't.
A good reason is something better for the company. Having your OS provider pull things for little reason is not seen as a good reason.
Ironically for many DOS programs (as opposed to Windows 3.1 16-bit stuff) you get better behaviour from dosemu on Linux, and the options (if you need/dare) to allow direct hardware access to certain things.