Intel 8086 processor has very limited of accessible memory address. It is 16-bit wide data bus, which means it can only access address up to 2^16 = 64 KB. But by using the help of segment registers, it can access up to 2^20 = 1 MB.
I knew it for sure, because I ever created program using Assembly language on 8088 (variant of 8086). I had to limit the maximum program and data size in the 64 KB boundary.
Source:
https://en.wikipedia.org/wiki/Intel_8086What should I do? Is this target not buildable at the moment?
I'm afraid you have to reduce the size down to at < 1 MB, which I think is (almost) not possible.
I wonder why you want to target 8086 processors. It is 25 years old technology. Better try the 32-bit processor (i386), which has more accessible memory (up to 2 GB).