Modern CPUs don't actually execute the legacy instructions, they execute core-native instructions and have a piece of silicon dedicated to translating the legacy instructions into them. That piece of silicon isn't that big. Modern CPUs use more transistors because transistors are a lot cheaper now, e.g. the i486 had 8KiB of cache, the Ryzen 9700X has >40MiB. The extra transistors don't make it linearly faster but they make it faster enough to be worth it when transistors are cheap.
Modern CPUs also have a lot of things integrated into the "CPU" that used to be separate chips. The i486 didn't have on-die memory or PCI controllers etc., and those things were themselves less complicated then (e.g. a single memory channel and a shared peripheral bus for all devices). The i486SX didn't even have a floating point unit. The Ryzen 9000 series die contains an entire GPU.
Modern CPUs also have a lot of things integrated into the "CPU" that used to be separate chips. The i486 didn't have on-die memory or PCI controllers etc., and those things were themselves less complicated then (e.g. a single memory channel and a shared peripheral bus for all devices). The i486SX didn't even have a floating point unit. The Ryzen 9000 series die contains an entire GPU.