There are various slimmed down versions of Linux. The kernel itself can be squeezed down into rather small footprint.

It's the lack of full MMU that's the actual reason, it keeps the chip firmly in the microcontroller domain.

in 1995 the Linux (Slackware) was flying on 25MHz 386SX with 4M RAM :)

...in part because the 80386 supported virtual memory.

+1 for nostalgia!