The 8086 CPU is organized as two separate processors, called the Bus Interface Unit (BIU) and the Execution Unit (EU). The BIU provides various functions, including generation of the memory and I/O addresses for the transfer of data between outside the CPU, and the EU.
Block diagram of the 8086 Central Processing Unit (CPU)
The EU receives program instruction codes and data from the BIU, executes these instructions, and store the results in the general registers. By passing the data back to the BIU, data can also be stored in a memory location or written to an output device. Note that the EU has no connection to the system buses. It receives and outputs all its data through the BIU.