"over the two decades MS and Intel kept us in 64k blocks"
Two decades? The 80386 was released in 1986. Just four years after the original PC. Software took longer to become fully 32 bits, but remember many PCs back then had few MBs of RAM only. Many registers use limitations were lifted since the 8086.
I was reading an "Old New Thing" blog post a few days ago, which remembered than in *1995* most PCs had only 4MB of RAM. Nevertheless, many DOS extenders allowed for 32 bit programs even before Windows switched to 32 bit executables.