The Program Files (x86) is the default installation folder for 32-bit applications in 64-bit Windows. It separates the aforementioned applications from 64-bit applications, which typically reside in another Program Files folder.
The existence of two Program Files folders only occurs in 64-bit iterations of Microsoft Windows in order to split up applications of differing software architectures and preserve system stability. If, for instance, a 32-bit program locates and tries to use a DLL file that only works with 64-bit programs, said program would likely encounter runtime errors. To avoid this and other potential problems, Windows automatically redirects 32-bit software installations into the Program Files (x86) folder, whereas 64-bit software installations default to the Program Files folder.
Windows utilizes the WOW64 emulator to run 32-bit applications in a 64-bit environment. Backward compatibility exists in 64-bit Windows due to the prevalence of 32-bit programs. These programs have the "x86" designation as a reference to the Intel 8086 and other processors with similar model numbers. Backward compatibility is also the reason why many iterations of 64-bit Windows come pre-installed with both 32-bit and 64-bit of the same applications, such as Internet Explorer. While benchmarking tools show that Internet Explorer x64 is faster and can use more memory, its 32-bit equivalent co-exists with it in the same machine to run 32-bit browser plugins.