Run 32bit applications on Windows 10 64 Bit

Simply put, if you want to operate an older, 16-bit program, you have to be running a 32-bit version of Windows. 64-bit versions of the operating system simply do not support it, as they lack the compatibility layer (they are compatible with the more widely used 32-bit software, however). There are some other limitations of 64-bit Windows, but the key point here is that 16-bit programs won't execute.

Edit: After revisiting this question some time later, I'd like to address your findings in the OP.

1. WoW64 lets you run 32-bit programs in a 64-bit Windows environment. It is built into the Windows operating system and does not require additional installation. Similarly, 32-bit installations of Windows can run 16-bit programs.
2. XP Mode was a feature of Windows 7 Professional, Enterprise, and Ultimate, that allowed you to run the more popular at the time Windows XP in a virtual machine.
3. Virtual Box, or any virtual machine software (VMWare is another example) allows you to install an operating system inside and run it inside of your primary machine. This would be arguable the easiest way to achieve your goal as you could simply install the software onto a 32-bit virtual OS. If you gave the VM 2GB of memory access, on a 32-bit install, it would run okay. Sluggish, but okay.
4. Partitioning your drive would allow you to dual boot twin installations of Windows. This is a more permanent solution, and shouldn't be done IMO unless you can't run the VM.

This isn't 32-bit, it's 16-bit

This would require you to be able run a 16-bit WoW memory space.

WoW16 stands for Windows on Windows.

The WoW started in windows 3.0, often called Windows for Workgroups.

Since this 16bit memory space is no longer available you could install DOSBox to the system, install Windows 3.1 to DOSBox and run the application from there.

Your other option is to install a 32bit version of Windows 10 as a virtual machine and run it from there.