Realistically, there are not 2^16 machines on a class B network (the physical wire cannot support that many machines).
But, using subnet masks, the class B network can be configured as a class C network.
If your IP address is 126.96.36.199 (that's a class B), you can tell IP to use 169.124.21 as the network number instead of 169.124.
You do that by specifying a mask of 255.255.255.0.
In a network, all machines must have the same subnet mask. If not, the definition of the network number would vary from one machine to the next, and that would cause the IP software to malfunction.