Its famously determined, but I feel that a DOS CLI app isnt much of a challenge since the DOS subsystem is essentially ossified. What would be the result if, say, you tried to run something DOS-y that was demanding or an early Win16 app? Say, Zortech C++ from 1986 with the Pharlap DOS extender or Minesweeper from windows 3.1. Would they work?

That’s not a DOS app, it’s a Win32 console app. DOS apps (16-bit or 32-bit) or Win16 apps would not run natively.

Win16 got dropped at some point, probably because keeping it didn't add up financially. I have little doubt they could have kept support for much older stuff.