The largest possible segment is 0FFFFh and the largest possible offset is also 0FFFFh. By applying the shift-and-add method, the physical address is
0FFFF<<4+0FFFF =0FFFF0+0FFFF =10FFEFh
The number of possible physical addresses is 1 plus the highest possible address (since zero is an address). Consequently, the number of possible physical addresses is 10FFF0h, or in decimal notation, 1,114,096 bytes. Since 1 MB is 1,048,576 bytes, the total number of accessible memory is approximately 1.06 MB.
Real mode was originally designed for computers with exactly 1 MB of memory installed. On these computers (which are now ancient history), the physical addresses from 100000h to 10FFEFh simply did not exist. When the user attempted to access phyisical addresses in this range, the attempted physical address would be truncated to an address within the primitive computer's limit by clearing the 20th bit of the physical address. For example, physical address 10FFEFh would be truncated so that it would actually reference physical address 0FFEFh.
As newer computers were invented that had more than 1 MB of memory installed, problems still arose about compatibility as older programs that depended on this truncation to function properly didn't work on newer machines. To correct this problem, even on newer computers (including today's), the truncation still takes place unless a specific message is sent to a special port instructing the computer not to do the truncation. In programs that run under a windows dos box, the truncation generally does not take place (I don't know if or how it can be toggeled by messing with the Windows registry). If you are running in a genuine dos environment, the truncation may or may not take place depending on technical details such as memory managers. You just have to experiment and see. If your program is booted directly from a floppy disk, however, you can be absolutely sure that the truncation does occur unless you manually write to the port yourself to disable it.