Why segmentation was done in 8086??

The segment requires only a 16 bit number to represent the base address for a segment, and only a 16 bit offset to access any location in a segment. This means 8086 has to manipulate and store only 16 bit quantities instead of 20 bit quantities. This makes for an eaiser interface with 8 and 16 bit memory boards.

Another reason is the type of micro computer in which 8086 is been likely to be used. It is made for timesharing microcomputer system. In this several users share a CPU. The CPU works on one users program for say 20ms then shifts to another user program say again for 20ms then it comes back to the first user. So point is it keeps constantly switching for new code and new data.

Segmentation makes this process of switching very easy for processor. Each users program can be assigned a separate set of logical segments for its code and data.

So in short segmentation makes it easy to keep users programs and data separate from each other, making switching easy.