I'm definitely the wrong person to ask because my solution was to write Rust.
I think the machines C was conceived for are small enough by today's standards that I would not bring a high level language (like C) to the fight, a macro assembler and you'll be fine. For today's much larger machines, use Rust.
Oh you've got 16-bit addressing? Chart all the addresses and what you'll use them for on a white board or a big sheet of paper. You do not need "allocators" like malloc, that's Steve's job, Steve has a sharpie to "allocate" memory on the chart.
Ironically I think to make the best use of such a small memory window, you'd want a compacting garbage collector. Lots of the 16-bit era BASICs used compacting GC for their strings.
Yes you can statically allocate, but who wants an artificial limitation like "16 strings, 256 bytes each" when some users want 200 strings of 8 bytes and some users want 4 strings of 500 bytes. Static allocation is something you can do when your memory is large compared to your use cases.