The segmented memory system was used to expand the 64KB limit on first-generation flat address space. Computers made prior to segmented memory used a flat addressing system based on a four-digit hexadecimal code. With hexadecimal, the highest 4-digit number you can create is FFFF (or 65535), which equals 64KB.
The Intel 8086 processor generation was designed to address as much as 1MB of memory but was hampered by the limits of flat address space. Rather than redesign the entire memory system, Intel modified it to achieve the greater capacity through a two-part, compound 16-bit address.
The MMU (memory management unit) would then interpret the segment, as well as its offset, to find the physical address. Once the address was located, the MMU would enquire if the memory permissions allowed the request and, if they did, perform it.
Strictly speaking, flat address space used in 32-bit computing is actually segmented. However, the entire space is a single segment addressing the entirety of the 32-bit segment or 4GB memory space.