CD-i is not easy to categorize in the line of game consoles of the ninetees era. At core is it a 16 bit design which sounds like it should be capable of games that were also possible on the Super Nintendo/Famicom or Sega Mega Drive. The fact CD-i was CD-based made it slower compared to cartridge-based systems. But I doubt it could handle the speed of SNES games, simply because the system design of CD-i was not positioned at games in the first place.
On the other hand: CD-i could be upgraded with a Digital Video Cartridge which was equipped with a 32 bit RISC processor and 1MB of extra memory. The acronym RISC stands for reduced instruction set computer, it represents a CPU design strategy emphasizing the insight that simplified instructions that "do less" may still provide for higher performance if this simplicity can be utilized to make instructions execute very quickly.
Although it made 3D graphics possible like in Chaos Control, it didn't make CD-i a 32 bit machine. But it's definitely more than a 16 bit machine. So what is it?
The CDi is based on the Motorola 68070 processor which has both 32 and 16 bit parts. It wasn't designed for games, but after the sales department noticed that the cd-i was sold more and more to be used as a games machine, they started to focus more on the gaming side of the machine and thus releasing the cd-i 450 and 550 models. They just shifted a bit to late to gaming. If they had focus more on it's gaming part and less on the multimedia part, i think they could have had more succes. When it was just on the market it was pretty powerfull, but by the time the focus was on gaming, the hardware was already a bit outdated. The lack of any gaming display capacity is also a weak point : no sprites, no tiles, thinking that allow for "traditional" games.
[Thanks & credits: Gunstar, cdifan]