Application Deployment Types - Windows Server 2016 OS choice
SCCM currently doesn't list Windows Server 2016 as an OS choice from within "Deployment Types" and more specifically at the "Requirements" tab when Operating System is used as a prerequisite. This is a must have in order to be able to target specific applications and deployments only over Windows Server 2016 instances.
At this time even SCCM 1607 doesn't support this as a choice.
This is fixed in 1606 RU1
Just to report back. This issue is resolved with Roll Update 1
Reference link for the submitted bug report: