And it came back to bite them when later processors used those bits.

That type of thing is still done today.

For example, in V8 they use the bottom 2 bits of pointers for other things. They get away with it because objects are 4 byte aligned.

Last time I looked, the current 64bit Intel CPUs only used the lower 48 bits for userspace virtual addresses. This leaves 16 bits available if you want to tag your pointers with some additional information. This can be useful for saving space or using them with an 8 byte cmpxchg.

This kind of trick is easier to get away with if you know exactly which CPUs your software is going to run on. Otherwise your software could break horribly when a new generation of CPU comes around.