That is correct. All you need is an IBM 5150 with an IBM CGA card and 640KB of memory.
The 640KB of memory may have been a very expensive option in 1981, but not impossible. Most parts of the demo don't need nearly that much memory anyway, and would probably run with 256KB or less.
The 'impossibilities' are mainly on the software side: we require DOS 2.x, which didn't exist yet in 1981 (although it will run on a 1981 machine).
You would also need DOS 2.x to support the 360KB double-sided 5.25" floppies. They existed in 1981, but early DOS only supported 120KB per side, and early PCs were fitted with single-sided floppy drives.
But this could all be worked around (and some parts could be modified to require less memory as well), so all of the audiovisual effects you see in 8088 MPH are possible on an actual stock 1981 machine, with DOS 1.0 and a single-sided 5.25" floppy drive.
The 'impossibilities' are mainly on the software side: we require DOS 2.x, which didn't exist yet in 1981 (although it will run on a 1981 machine). You would also need DOS 2.x to support the 360KB double-sided 5.25" floppies. They existed in 1981, but early DOS only supported 120KB per side, and early PCs were fitted with single-sided floppy drives.
But this could all be worked around (and some parts could be modified to require less memory as well), so all of the audiovisual effects you see in 8088 MPH are possible on an actual stock 1981 machine, with DOS 1.0 and a single-sided 5.25" floppy drive.