There is a big market on eBay offering retro Windows 98 for sale. Some of those appear to be built at home by a cottage industry. I'd like to buy a retro PC to play my favorite combat flight sims from the 1990s, but which? The new retro PCs have different hardware compared to what we had 25 years ago and it's a little confusing.

Just look up any Falcon Northwest PC ad in that era (do you want '98? '99? 2001?), and spec as close as you can.

Generally I would stick around these specs:

500Mhz Pentium III Intel CPU or higher
Voodoo 3 3000 AGP video card (16mb)
128mb-256mb of PC100/PC133 SDRAM
20GB-40GB PATA 7200rpm hard drive
Sound Blaster AWE64 or Live! sound card
8x DVD-ROM drive
300W-ish power supply
Windows 98SE

Just install Win98 on a virtual machine on a modern computer, why bother with a very old PC?
Free and easy to use:
https://www.vmware.com/products/workstation-player.html

Have people tested it with old games with consistently good results?

Not sure what you mean. This is an actual OS installation, from an actual installation kit from Micro$oft or whatever, in this particular case Windows 98 runs exactly as it would run on a physical machine but without the issues derived from using a decades old computer. If that's what you're asking, yes, any software that runs on Win 98 on a physical PC will run on a virtual machine. Le me reiterate, this is an actual Windows 98 installation if you use the actual M$ installation kit, in whatever format you have available, be that an old bootable CD or a .iso disk image on your harddrive or whatever.