Why 32 bit processor are called as x86 ?

The original x86 CPU was the Intel 8086. This was followed by the 80186 and the 80286. All three were actually 16-bit. They were followed by the Intel 486, the Pentium, the Pentium 2, etc.

These days, x86 usually refers to the 32 bit version of the hardware architecture, although it occasionally is used in reference to the x86 processors, regardless of their "bit size". The 64 bit version is most often referred to by x86-64 or AMD64, the latter due to AMD beating Intel to market with 64-bit x86 based hardware.And not all 32-bit processors are x86. There are some non x86 32-bit processors. The term x86 actually signifies backward compatibility with the original 8086 instruction set. The 32 bit x86,actually x86-32 became so popular that they were referenced as x86. The exact names would be x86-16 , x86-32 and x86-64(or x64) for the x86 chips.