The virtualization itself is not the bizarre part. The bizarre part is where the actual OS is 16 bit and runs as the singular "task" of a thin 32 bit layer that merely calls itself a "memory manager". The details of that machinery (segmentation, DPMI, ...) are quite a sight to behold. And it's all because of how PCs evolved at that time, and because we needed to keep running DOS and still wanted to make use of all the extra memory that wouldn't fit into its address space.