Most 8086 instructions are implemented in microcode, a level of instructions below the familiar machine instructions. But before microcode can run, something called the Group Decode ROM categorizes instructions according to their structure, shown as colors below.
The Group Decode ROM generates 15 signals indicating how to decode the instruction. For instance, can it run without microcode? Does it have bits specifying the argument size? Is it followed by an addressing (Mod R/M) byte? Then the processor executes the instruction.